TD stop out of their US 5s30s steepener.....>

US TSYS: TD stop out of their US 5s30s steepener.

- TD note that "the curve has flattened dramatically in recent weeks and we are

respectful of stop-loss discipline. In addition, the recent bull flattening of

the curve, increased stripping activity and pickup in pension contributions

suggests structural demand in the long end, which could persist for a while.

Corporate pension contributions totaled $62bln in 2017, with 7 employers

contributing more than $2bln to their plans, and another 10 adding at least

$1bln, according to consulting firm Milliman. Verizon contributed $1bln to their

pension in Q1 2018 and quite a few firms have announced higher contributions

(FedEx, 3M, AbbVie and General Dynamics). We initiated the steepener based on

the view that the front end was largely pricing in an appropriate Fed path and

that term premiums were low. Term premiums should rise as Treasury supply picks

up and Japanese demand declines. We nevertheless expect much of the increase in

Treasury supply to come in the 0-5 Year sector. For now, pension demand in the

long end seems to be dwarfing the duration supply."