###POV: COLD WEATHER NEARS...>

US TSYS/OVERNIGHT REPO: ###POV: COLD WEATHER NEARS BUT US 10-YR TSY NOTE REPO

STILL HOT; MAY SINGE SHORTS/BEARS: 

- The cash 10-year note will remain very tight in overnight repo mkt until at

least Dec. 15, amid pre-auction shorts/sales into next wk's 3/10/30Y auctions.

The 10-yr note RP traded very tight Tues: -3.00%. 

- But 10-yr note tightness also reflects that some accounts felt cash 10-yr note

yield was too low, so they sold or shorted it, then needed to borrow it in

overnight repo. But funds and foreign central banks who own scarce 10-yrs don't

want to lend in Dec because they have to solidify year-end balance sheets. 

- S/TERM IMPLICATION: It will be hard to get 10-yr notes. And this scarcity will

last.  

- LG/TERM IMPLICATION: 10-yr shorts will be hurt as "shorts are not working

well: they are getting crushed," said a trader. Some shorts felt 10-yr yield,

2.353% 5pm ET Tues, shd be more like 2.5% as econ improves; 2.5% cd happen by

1Q/2Q 2018. But it may be early to aggressively short 10-yr into yr-end

scarcity.