Nominal Treasuries see FX-tied.........>

US TSYS/TIPS: Nominal Treasuries see FX-tied buying as US$/yen weaks, brings in

light dip buying, but volume  about "30% below average," as a trader put it.

Next up: 1pm ET US$14B 5Y TIPS reopening.  SMRA's John Canavan noted reopening

of 1/8% 4/15/22 5-yr TIPS raises "all new cash when it settles next Friday."

- BMO's Aaron Kohli expects a "stop close to the screws" as 5Y reopening

auction's "liquidity provision," and "tax cut optimism and high real yld levels

offset rich breakevens, stretched crude positions and a hawkish Fed." 

- He adds "positive tax headlines, "inflation seasonals suggest TIPS will

perform well in the coming months" but doubts gains' "longevity; "biggest" TIPS

risk is "continued absence of stronger inflation. We see some nr-term upside to

owning TIPS in the new yr, but that view dims considerably" into future. 

- He noted US real ylds rose so "auction at these levels would be the highest

since 2015," so "fairly solid value proposition for real money buyers, but even

deflated levels of 5-yr breakevens don't look" esp. "cheap" w/ "anemic CPI."

- HISTORY: Aug. 5Y TIPS reopening drew 0.117% high yield, 2.41 bid/cover, 65.5%

indirects, 11.6% directs, leaving only 22.8% for primary dealers to mop up.