Treasury has a double-barreled.......>

US TSYS/SUPPLY: Treasury has a double-barreled blast of supply today: the 11:30

a.m. ET US$15B 2Y FRN auction and the 1pm ET US$34B 5Y note auction.

- 1) The 2Y FRN auction should draw interest from accounts wanting safe-haven

short paper and/or the possibility of better yields amid a rising rate

environment.

- HISTORY: Sept. 2Y FRN auction had a 5.5 bps discount margin and 47.11%

indirects, 0% directs, 52.9% dealers, 3.46 bid/cover. 

- 2) The $34B 5Y auction could face challenge amid choppy conditions so it's

hard to predict in advance how demand will be; but it is cheap.

- Odeon Capital rates strategist John "Rocket" Spinello noted the 5-year note

has "moved toward the high end of 2017 (yield) range," which was 2.145% in

mid-March. The 5Y note is now cheap on relative value basis, he said. The 5Y

yield moved from 1.60% Sept.8 to 2.08% today, which has "the belly oversold and

short vs the bond in the extremely crowded structured trade for a series of rate

hikes beginning December," he added.