Additional Five Year Auction Thoughts

November 26th, 2013 9:25 am | by John Jansen |

The following views are from a dealer note and reflect a trader’s thoughts on 5 year note auctionl

As the 5 year point has richened in the ZIRP forever frenzy many have been stopped out of short positions in that sector. He thinks the issue is rich on curve and looks for a curve concession into 100PM. Real money clients have been better rollers into the new issue. Hedge funds have sold the roll anticipating that there will be a reopening of the 1 3/8 November 2018 (which I wrote about earlier). The 4 year point on the curve has richened and he would anticipate real money extensions out of that sector into the 5 year note. Finally, central banks are in buy the dip mode and lower prices should see that group testing the offered side of market.

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