### EXCLUSIVE: Treasuries had a bear........>

US TSYS: ### EXCLUSIVE: Treasuries had a bear steepening selloff last night as

GOP-led Senate managed to approve a fiscal 2018 budget, which spurred tax reform

hope thus risk-on mood. Tsys selling kept going in NY, but recently, the mkt

stabilized at the price lows amid cautious dip buying, so now traders eyed next

big US Treasury technical levels. The next big levels are as follows: 

- 1) The cash 10-year note 2.40% yield was a major barrier, has held for six

months; so a break above that yield may draw in a big wave of US and foreign

(Japanese?) buyers if hit. The current 10-year note is now at 2.381%. (By the

way, the 2.39% level is a 61.8% Fibonacci level; and 2.40% was hit on Oct. 6th,

2017.) 

- 2) Also the cash 10-year note 2.60% yield is expected to be a big MBS

convexity level that if broken quickly (and speed is important here), that will

usher in a big wave of hedging: either Tsys selling, Tsys shorting or US swap

paying to hedge such needs. Again, speed is key: a slow gradual approach to such

levels allows MBS entities to hedge as they go; a quick jump to that yield means

"catch-up" hedging so to speak.