Tsys drifting lower amid long end........>

US TSYS/7Y: Tsys drifting lower amid long end selling, pre-auction shorts into

7Y auciton, and sales in 30Y bonds. BMO's Aaron Kohli said at today's 1pm ET

US$28B 7Y note auction, he expects a "stop close to the screws" as "the outright

yield and favorable stats offset some of the richness of the curve. 7s tend to

outperform 5s on hawkish Fed news as yields rise, and with month-end only a few

days away, it's likely that we'll see some structural buyers in the market early

next week." 

- He advised to be "buyers of 7s on dips as we are with 5s, once the risk of a

hawkish Fed nomination has passed or once the news is fully priced in." (Recall

that Pres. Trump said he'd announce Fed Chr before Nov. 3 trip to Asia.) 

- Kohli said on outright basis, "7s look cheap, just as 5s did with yields at

their highest levels since March of 2017. On a nearby curve, 7s don't look

nearly as cheap (versus 5s and 10s) as they do a wider curve (versus 2s and

bonds)."