LBBW's Karl Haeling said "a growing.........>

US TSYS: LBBW's Karl Haeling said "a growing number of market observers see the

prospective US tax changes as bearish for Treasuries, including long-dated

maturities which have been moving sideways in recent years. Yet, 10- and 30-year

maturities simply have not sustained any significant sell-off and actually

rallied strongly on Wednesday, with shorter maturities outperforming."

- He adds that "bears argue that bond prices will simply start falling suddenly

and sharply in the not-to-distant future. But there are reasons why this may not

occur at all, and over the remainder of the year, technical considerations could

actually drive the whole Treasury market higher and the yield curve steeper."

- He said that "immediately ahead, traders and investors face pressure to square

positions ahead of year-end. Many investors/traders are underweight their

duration targets and/or are outright Eurodollar futures and 2- and 5-year notes.

There are also a lot of yield curve flattening positions on."

- "So now, with the latest Fed rate hike and U.S. tax prospects unable to

generate a more bearish environment, the pressure to unwind outright short and

yield curve flattening positions will simply increase," Haeling said.