A quiet re-open for the space. The curve....>

US TSYS: A quiet re-open for the space. The curve bull flattened on Tuesday,

with T-Notes closing just shy of highs. The space benefitted from ongoing worry

re: U.S.-China trade matters, even after it was confirmed that the Chinese VP &

top trade envoy, Liu He, will journey to Washington on Thursday (which pressured

the space to lows in the European morning). A Chinese trade expert that is

advising the government told MNI that the talks may be dragged into next year if

Pres. Trump goes ahead with his threat to slap higher tariffs on China. Nikkei

reports highlighted that "despite being steps away from finalizing an agreement

to end the trade war, negotiations between the U.S. & China have come to a

screeching halt, largely over Chinese state subsidies to its core industries."

- The bid was further supported by heavy equities, with the VIX surging (short

positioning in VIX futures has jumped recently), as market sources highlighted a

heavy volume day for VIX calls.

- Elsewhere, Fed's Clarida noted that the U.S. econ is in a good place, with

temp. factors weighing on inflation, reiterating the Fed's wait & see stance.

- T-Notes last 123.29, U.S. 10-Year cash Tsy yields closed at 2.457%.