Caution re: developments in the Sino-U.S....>

US TSYS: Caution re: developments in the Sino-U.S. trade war underscored the

Asia session, with cash Tsys bid on the back of the long weekend, lending

support to T-Notes. This was despite Tsy Sec Mnuchin's attempts to provide

assurances re: Sino-U.S. trade matters and positive mutterings from the Editor

in Chief of the Global Times on Monday.

- FV/TY flattener flows also helped to support T-Notes, with a continuation of

the recent Chinese inflation dynamics (pork prices driving headline CPI higher &

PPI extending on its recent run of deflation) further aiding the dynamic.

- T-Notes last +0-05 at 130-12, a couple of ticks back from highs, with yields

2.9-4.0bp lower across the curve. Also worth flagging that we saw the 2x3 USZ9

162.00/159.00 put spread blocked, with 5.0K of the 162.00 puts trading vs. 7.5K

of the 159.00 puts. There was also a 20.0K buyer of the TYX9 132.00 calls that

showed their hand as we moved towards London hours.

- Eurodollar futures 1.0-3.5 ticks higher through the reds.

- Fed's Bullard, George, Bostic & Daly are all due to speak later today.

- N.B. The NY Fed Empire m'fing survey was released early (yesterday).