SMRA's John Canavan noted today's......>

US TSYS/TIPS: SMRA's John Canavan noted today's 1pm ET $14.0B reopening of the

1/8% of 4/15/22 5-year TIPS will "raise all new cash when it settles next

Friday," Dec. 29th. 

- "The yield on the 5-year TIPS issue was -0.511% early in July 2016, but it has

been trending higher since, and the rise has accelerated since early September,

in line with the move in the nominal 5-year issue," he said. 

- He noted TIPS 5Y yield earlier was "bid around 0.399%, which is the highest

it's been since the end of 2015." (Now it is bid at 0.413% at 11:15am ET). 

- "Oil prices have been rising and the Republican tax plan is expected to offer

an additional lift to the economy over the short-term, raising Fed rate hike

expectations going forward and pushing yields higher overall," Canavan said.

"The 5-year break-even has been quietly rangebound between 1.74% and 1.83% since

the middle of September, and is currently 1.805%. The break-even was trading

around 164.0 bps ahead of the August reopening."