A quiet re-open for the space. T-Notes......>

US TSYS: A quiet re-open for the space. T-Notes faded to session lows late on

Wednesday, after the initial risk-off bid faded.

- A poor 7-Year Note auction, coupled with the S&P 500 recovering its 200-DMA

(though still finishing the day comfortably lower) amid suggestions that

month-end pension fund flows were being put to work weighed on the space.

- Special Counsel Mueller formally announced his resignation from the role,

recounting the findings of his investigation. Despite some semi-accusatory

language re: President Trump, the speech held no "smoking gun." This probably

added to the weight on the space.

- Looking at the auction specifics for the latest 7-Year offering, there was a

fat 1.9bp tail, as the cover ratio slid to the lowest level observed since 2017,

while dealer participation picked up to comfortably top recent averages.

- Cash trade saw the belly of the curve underperforming in the wake of the

auction.

- T-Notes last 125-13, U.S. 10-Year cash Tsy yields closed at 2.260%.