A quiet re-open for T-Notes after Tsys......>

US TSYS: A quiet re-open for T-Notes after Tsys finished off best levels

Wednesday. Focus remained on curve inversion with the 3-Month/10-Year spread

extending its move lower, but finishing back from deepest levels. 5-/30-Year

spread reversed the early steepening. The space largely took queues from Bunds

and Gilts, with little reaction to local data. The latest 5-Year Note auction

had a 1.0bp tail, with the cover ratio and takedown metrics holding fairly

steady.

- Fed's Kaplan told the WSJ that he'd " need to see an inversion of some

magnitude &/or some duration..If you see an inversion that goes on for several

months..that's a different kettle of fish. We're not there yet." Early Asia

hours saw comments from Fed's George, who backed the Fed's patient approach

given downside risks. She pointed to external issues as the greatest risks to

U.S. economy & highlighted the benign inflation outlook.

- Eurodollar futures trade 0.5-1.0 tick higher through the reds. Wednesday saw

heavy put flow, highlight being >100k EDZ 71/72/73/75 put condor paying 3.5-4.0.

- T-Notes last 124.23+, U.S. 10-Year cash Tsy yields closed at 2.366%.