Treasuries see dip buying, despite.......>

US TSYS/7Y: Treasuries see dip buying, despite imminent $28B 7Y auction, after

market stabilized off the lows by the sizeable block buy of 27,500 Red Pack

Eurodlr futures (Dec'18-Sep'19) (see 11:40am ET bullet details). Cash 5Y, 7Y,

10Y outperform.

- BMO's Aaron Kohli said that 7-year volume stats "are fair with the market for

7s trading strong at 134% of the 10-day MA while the overall cash market is at

133%."

- He noted "headline risk dominates" with "some fairly significant events on the

calendar. We've got GDP out on Friday right after the auction and a pending Fed

announcement, to say nothing of the potential for a budget vote in the House in

the coming days and weeks. That will still hurt duration buyers on an outright

basis even if they outperform the front-end and 5-year on the move."

- Kohli noted "ETF flows have dropped to the lowest point since May 2016 with

$590 million coming out of the ETFs we track. Futures spec longs remain but have

cut positions in the last few weeks. That leaves more room to run in a rally

with longs currently at a scant 2.1% of open interest."