It was a relativly quiet start to......>

US TSY/RECAP: It was a relativly quiet start to the week in the US, rates

trading lower all session, off lows late after absorbing a lot of Tsy supply:

1M, 3M, 6M and 2Y supply. US$ index higher (DXY +.615, 89.715); equities sharply

weaker after holding around steady around midday; gold sharply lower (XAU

-17.50, 1329.09); West Texas crude little firmer (WTI +.22,61.90).

- Decent two-way flow was noted in Tsys, with a large duration weighted

flattener seen.

- Swap spds mostly tighter, long end leading move for much of the session. Light

deal-tied flow, pre-auction short setting to start off week. Modest front end

rate paying noted earlier. OTC swaption vol weaker.

- Heavy Eurodollar option trade, continued better buying low delta puts to hedge

for underlying pricing in increased chances of quarterly rate hikes.

- T-Notes last at 120.16+, 10-Year yield last 2.890%