Traders eyed US and foreign demand at....>

US TSYS/7Y: Traders eyed US and foreign demand at today's 1pm ET US$28B 7Y note

auction, including from Japanese accounts. - "We don't see a great deal of value

in 7s on the curve but the outright yield level as well as the longer-term

flattening theme should keep the auction well sponsored," said BMO's Aaron

Kohli. 

- "The biggest negatives are the prevailing momentum for a bearish steepening of

the yield curve on tax-cut optimism and September seasonals which imply a weaker

result for 7s," said Kohli. "We would look to enter flatteners once momentum has

exhausted itself, but acknowledge that steepening may continue for a bit." 

- He added that outright, the "7-year yields are the highest they've been since

March of 2017, offering some incentive for real money to buy at the auction. But

7s don't look nearly as attractive on the curve, because the Fed's hawkish tone

has generated a large flattening bias. The concession this morning is likely to

add to the demand if it is sustained at the auction."