The Treasuries market has built in a.....>

US TSYS/7Y: The Treasuries market has built in a mild price concession into the

week's last Treasury coupon auction, the 1pm ET $28B 7-year note auction. Some

expected that some month-end buying could aid the 7Y auction as

Bloomberg/Barclays Tsys index was expected to extend 0.07 yrs into the month-end

Friday Dec. 29th (also year-end). 

- Cantor Fitz analyst Justin Lederer believes "there will be buyers" in 7Ys

"aided by month-end/quarter-end" but like Wed 5Y auction, "would not be

surprised by a tail, given the time of year." 

- He adds "this 7 year is setting up to be underwritten at the highest auction

stop since December (2016) (2.385%)." 

- Jefferies economists Ward McCarthy and Tom Simons noted 7Y auction "is the

same size as last month" and "will pay down $2.5 bln." They warn Nov 7Y auction

"came with the widest tail since February 2016" and given this week's "tepid

demand" at 2Y, 5Y auctions, "a repeat performance may be in the cards today." 

- HISTORY: The US$28B Nov. 7Y auction drew a 2.230% rate, 2.36 bid/cvr, 58.6%

indirect, 13.7% direct, thus 26.77 left for primary dealers to mop up.