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Carry-over risk-off support in rates...>

US TSY FLOWS
US TSY FLOWS: Carry-over risk-off support in rates amid ongoing China trade
angst after late Thu Trump tweet on adding 10% tariff on remaining $300B China
goods. Little excitement from in-line July employment data +164k.
- Brief risk-on (equities spike, Tsys recede) catalyst: Pres Trump is "open to
delaying or halting the 10% tariff on 9/1" if China were to take action between
now and then - CNBC. Substantively NOT much different from when he tweeted would
be temporary late yesterday, "we'll see" if China comes to table sort of trope.
Note, 3M10Y inching steeper but remains well inverted.
- Flow included carry-over month end buying, deal-tied selling, large flattener
block (2s/10Y ultra), steepener unwinds. Heavy buying in front end as 25bp rate
cut at next Sep FOMC fully priced in (another 25bp cut at the October 30 FOMC is
running around 64%). Heavy Eurodollar option trade, mixed with some accts fading
the added rate cuts being priced in, while others buy cheap upside (EDH2 100.25c
trade). 
- The 2-Yr yield is down 1.8bps at 1.7158%, 5-Yr is down 1.7bps at 1.6664%,
10-Yr is down 4bps at 1.8537%, and 30-Yr is down 5.2bps at 2.3896%.

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