SocGen's Subadda Rajappa said the....>

US TSYS/SUPPLY: SocGen's Subadda Rajappa said the Tsy's "sharp increases in

borrowing needs are likely to warrant more issuance across the curve, which

might eventually lead the Treasury toward re-introducing a 20y bond or an

ultra-long bond. Such an announcement is likely pre-mature for the November

meeting, but we will be looking closely for indications of such changes at the

upcoming refunding meeting."

- She added that "based on our estimates for an increase in the deficit from

$650bn in FY18 to $900bn and $1tn in FY18 and FY19 respectively, we adjust our

coupon issuance for the upcoming year. We expect increases of $2bn in the 2y

sector and $1bn in 10y and 30y, starting in November, with gross issuance of

$2.4tn and net issuance of $556 for calendar year (CY) 2018 (not including

roughly $200bn in SOMA add-ons for CY18). Any indication of increased long-end

issuance is likely to exert further pressure on long-end term premiums at least

over the short term."