On Thursday TD Securities recommended.......>

US TSYS: On Thursday TD Securities recommended initiating a U.S. 5s30s curve

flattener at 24.5bp, targeting 10bp with a stop of 32bp, they continue to hold

on to 6m2s10s conditional bull steepeners as a hedge. TD believe "that the curve

flattening is a function of the market's perception that the Fed is nearing the

end of its hiking cycle and low term premium. The market is pricing in 3 more

hikes by the end of '19 & no further hikes from there. Meanwhile, term premium

has been low due to low global rates & strong pension fund demand amid a

relatively smaller increase in long-end Tsy supply. The recent steepening move

was driven by concerns of the BOJ abandoning YCC, President Trump's criticism of

Fed hikes, as well as crowded flattener positioning. Given that the real curve

steepened & Fed pricing remained largely unch., we believe that BOJ concern was

the predominant driver. The July 31 BOJ meeting will be critical, but we do not

expect any hawkish policy announcements just yet. We look for the curve to

retrace its recent steepening move; a robust econ backdrop & ongoing Fed rate

hikes should help floor front-end rates. Meanwhile, we exp. the long end to be

supported by continued low global rates & pension demand."