Nomura analysts also noted on today's....>

US TSYS/2Y: Nomura analysts also noted on today's 1pm ET US$26B 2Y auction that

"foreign sponsorship for the front-end has declined meaningfully, as seen in

recent 2s and 3s auction allotment data, while foreign central banks' US

Treasuries holdings at the Fed have also plateaued."

- They add that "given the seasonal dollar funding pressure and widening of the

cross-currency basis potentially into year-end, we think some investors may

rotate from front-end US Treasuries into dollar lending in FX markets, which

picks up attractive yields with less duration than front-end USTs." 

- They add too that "T-bills outstanding look poised to rise" with larger

auction size or more frequent auctions potentially, "with the Fed's balance

sheet normalization mode likely to be in full effect from the end of this month.

The funding market could become saturated with collateral paper and GC rates

have been trading higher, putting pressure on front-end UST valuations. While

valuations and carry/rolls look attractive, there is still risk of a tail at the

1pm auction."