- The DSTA confirmed that its net bond supply will be negative for the third year in a row
- While the total 2018 funding need is equal to that of 2017, it is very likely that the 2018 projection will be lowered (via reduction of t-bill issuance) as the new year progresses
- Faced with lower funding needs, the DSTA tries to walk a thin balance in lengthening its bond portfolio and to preserve liquidity on its curve
- The DSTA keeps its options open for 2018 long dated DSL issuance, but we expect that the bulk of this issuance will be concentrated in H2 of 2018
- As the DSTA announced that it will issue a new 10y and reopen its 7y benchmark in Q1, these supply indications could create flattening pressure
- The DSTA will no longer focus on unwinding longer dated receiver swaps under its risk framework
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