Early risk-on tone looked to have......>

US TSY FLOWS: Early risk-on tone looked to have more legs to run until rush of

negative risk headlines spurred sharp rally in rates by midmorning.

- Rise in Texas covid-related hospitalizations adding to sharp risk-on UNWINDs

last few minutes after virus risk rating in Beijing upgraded and schools closed.

Yld curves have halved steepening in the long end last few minutes. 

- Yld curves had been climbing steeper in early trade -- back near June 5 3+

year highs as long end extended session lows. Sources reported real$ selling

10s, fast$ 2-way in intermediates to long end, bank portfolio selling long end

as well. Deal-tied hedging contributing to early pressure.

- Rates scaled back appr half the initial bounce to trade in relative narrow

range through the second half. "TEXAS VIRUS CASES JUMP 2.9%, EXCEEDING 2.2%

SEVEN-DAY AVERAGE" bbg, spurring fresh round of de-risking (on more modest

scale).

- The 2-Yr yield is up 1bps at 0.1992%, 5-Yr is unchanged at 0.3423%, 10-Yr is

up 2.6bps at 0.7479%, and 30-Yr is up 7.3bps at 1.5342%.