Fed Chair Powell eco-outlook tried.....>

US TSY FLOWS: Fed Chair Powell eco-outlook tried to dissuade market anticipation

of negative rate implementation in a webcast w/Peterson Institute for

International Economics.

- The Fed view on negative rates has not changed, not something we are looking

at. Couple of reasons: our tools work, now doing 13-3 facilities that work,

evidence that they work. I know there are fans of negative rates, that is an

'unsettled area', but not something we are considering.

- Tsys pared early gains on Powell stating Fed not considering negative rates as

a viable policy, but resumed the rally after Trump turned up rhetoric against

China's efforts to renegotiate trade deals.

- Eurodollar option scale buyers low delta puts to fade the stubborn negative

rate chatter (Fed fund futures in 2021 also remain stubbornly over par).

- US Tsy $22B 30Y bond auction (912810SN9) tailed: awarded 1.342% (1.325% last

month) vs. 1.335% WI; w/ 2.30 bid/cover (2.35 prior). The 2-Yr yield is down

0.2bps at 0.1569%, 5-Yr is down 1.4bps at 0.3099%, 10-Yr is down 2.2bps at

0.6428%, and 30-Yr is down 3.4bps at 1.3357%.