Treasuries drifted lower in early........>

US TSYS/7Y: Treasuries drifted lower in early afternoon amid post 7-year auction

redistribution sales, pre-month-end/year-end position tweaks too. Tsys saw 5/30Y

flatteners and 2/5Y, 2/10Y steepeners done. 

- Jefferies economist Tom Simons noted that "the 7-year note auction stopped 0.8

bps above where the WI was bid at 1:00PM at 2.370%. This auction was a little

bit better than last month's but otherwise pretty sloppy and consistent with

this week's 2s and 5s."

- He added that at 7-year auction, "indirects took down 60.5% of the auction,

which is more than last month, but still solidly below the recent average. On

the other side of the coin, Dealers took down 26.4% of the auction, well above

their recent average." He added that "directs were below average with a

relatively soft with a 13.1% takedown."

- Simons added that "as we noted after this week's 2- and 5-year auctions, the

final week of December is a tough one for Treasury to try and distribute supply.

The weakness in the auction is not a surprise, and doesn't really tell us much

about longer-term trends."