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*** Geopol' tensions driving........>

US TSYS SUMMARY
US TSYS SUMMARY: *** Geopol' tensions driving risk-off/safe haven support that
continues to push rate futures to new session highs. Little resistance after
latest Tweet from Pres Trump that Korea and Japan can buy US military equipment.
- S&P rating agency said do not see Feds raising rates again this year. Mkts
concur as rate hike % inches lower. According to MNI PNCH, chances of a hike in
either Sep or Nov FOMC meetings are basically 0.0%, the probability of a hike at
the Dec 13 FOMC has dropped to 26%.
- Sources report real$ buying in 2s, 3s and 5s, spec acct selling in 10s,
deal-tied hedging, small but consistent payers in 2s and 10s. No curve steepener
capitulation yet as 10Y yld hlds around last wk lows 2.075%, some looking to add
if technical support holds. Busy corp supply calendar
- Swap spds march wider, short end dragging long end off early session narrows.
Safe haven/risk-off tone adding to move while hedges for incoming swappable
supply adds to flatter spd curve. Sources report mild rate paying in 2s, two-way
in 2s and 2Y OIS, deal-tied paying in 2s, 5s, 7s and 10s, two-way rate and spd
flow from asset managers fast$ and bank portfolios in 5s through 10s.

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