### POV: The Tsy 2-yr note...>

US TSYS/OVERNIGHT REPO: ### POV: The Tsy 2-yr note tightness in overnight repo

market does not seem to reflect unusual factors but rather what some called

"dislocation" in usual runup to late-month 2/5/7-year note auctions. The RP mkt

Wed saw Treasury 2Y, 5Y, and 10Y all tighten. The 2-year note had "legitimate

shorts" but also some trying to "squeeze the shorts", said traders earlier this

week. But now traders said tightness is just due to various accounts doing

normal shorting of 2Y note for pre-auction reasons to hedge against 2/5/7-year

auction supply next week. "It's getting close to the month-end: 2-yr notes

generally get special around this time," said one trader.

- A different trader agreed. "It's just pre-auction stuff," he said. The 2-year

note traded at 0.70% midday vs. a 0.60% average and a tightest 0.45% rate

Wednesday, he added.

- But one trader eyed "some dislocation" amid the 2-yr approach to the

late-month auctions.

- The 5Y note did usual pre-auction midmonth tightening into late month

auctions; 10Y tightened too. The Treasury General Collateral traded at 1.09%.