*Correct* US Tsys trade higher, although....>

US TSYS: *Correct* US Tsys trade higher, although T-Notes failed to consolidate

above Monday's opening levels, and the space now operates shy of session highs.

- The broader risk off flows were triggered by a BBG source report pointing to

an additional $200bn worth Chinese goods being identified by the US Trade

Representative for tariffs. With the Trade Rep confirming that "as a result of

China's retaliation and failure to change its practices, the President has

ordered USTR to begin the process of imposing tariffs of 10 percent on an

additional $200 billion of Chinese imports. This is an appropriate response

under the authority of Section 301 to obtain the elimination of China's harmful

industrial policies. USTR will proceed with a transparent and comprehensive

public notice and comment process prior to the imposition of final tariffs, as

we have for previous tariffs."

- A MOFCOM official has reiterated that China will take countermeasures against

U.S. protectionist policies.

- Participants look to U.S. PPI & a speech from NY Fed's Williams later today.

- T-Notes last at 120.08+, U.S. 10-Year Tsy yields last at 2.842%.