Bid by the early closing bell but......>

US TSY FLOWS: Bid by the early closing bell but off midmorning highs. Tsy

futures spiked after strong 5Y auction (stops 1.8bps through, w/dealers taking

21.48% vs. 25.0% avg). Futures topped overnight highs and come under mild

selling/profit taking from fast$; equities incidentally reversed course, trade

down to 3222.5. Yld curves mixed w/3M10Y flatter/off lows. 

- Strong out-sized move in gold as well, tapped 1497.74, currently 1496.32

+10.53; talk of program buys along w/Tsys post 5Y, risk off support for havens

ahead holidays.

- After a steady/mixed open, spds running wider across the board amid decent

flurry two-way flow after 5Y note auction: initial receivers in 2s from

1.720-1.7215%, two-way in 5s with better payers around 1.7340% has sector

dis-inverting today (earlier 5Y payers at 1.7652%), payer in 9s at 1.8450%;

early 7Y receiver at1.8105%.

- Heavy early Tsy option volume w/ +100k TYG 129/130 call spds, 11/64

- The 2-Yr yield is down 1.3bps at 1.639%, 5-Yr is down 2.5bps at 1.724%, 10-Yr

is down 1.9bps at 1.9102%, and 30-Yr is down 1.6bps at 2.3406%.