Halister News

(Bloomberg) -- 20-year sector “has cheapened along the curve” since TBAC recommended the Treasury Department consider reintroducing a 20-year bond instead of an ultra-long, JPMorgan strategists led by Jay Barry say in May 18 note.

• In particular, the 4.5% due 2/15/36 cheapened by 2bp vs fitted curve after the refunding announcement, while the 15-year sector richened
• Most securities near the 20-year sector in the US futures deliverables basket have made “significant,” though not uniform, moves
• Steepness of May-38/Feb-39 curve “stands out to us as particularly appealing”; they recommend that flattener (4.5% due 5/15/38 vs 3.5% due 2/15/39)
• Treasury may pose a charge question on the topic of 20-year issuance at the August refunding with an aim to sell one in February, “which should allow the 20-year sector to trade with a smaller premium than in recent years”

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Greg Chang, Elizabeth Stanton