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Mkts walked back wk opener Tuesday,....>

US TSY FLOWS
US TSY FLOWS: Mkts walked back wk opener Tuesday, risk-Off cooled slightly as
equities regained some ground (EDU9 +52.0 in late trade) after Mon's rout. Short
end underperformed while bonds see-sawed off lows to near middle of range,
decent volume (TYU>2M), yld curves flatter/off steeper levels in first half --
large TUU/TYU block underscored move.
- Short end under pressure all day as chances of 50bp cut at Sep FOMC cooled
- Heavy option and related hedging flow traded on day, bearish tone w/better
buyers downside puts, upside call sellers, though some ZIRP insurance hedging
persisted. Implied vols receded after surging Mon.
- Aside from pre-auction short sets, mkt took down decent amount of corporate
high-grade issuance, $13B Occidental Petroleum jumbo 10-tranche lead the days
supply, two-way rate locks/unwinds on day.
- Latest US Tsy $38B 3Y note auction (912828YA2) awarded 1.562% (1.857%
previous) vs. 1.563% WI, bid/cover 2.41 vs. 2.39 previous (3.05 avg).
- The 2-Yr yield is up 1.6bps at 1.5891%, 5-Yr is up 0.3bps at 1.5211%, 10-Yr is
up 0.5bps at 1.7124%, and 30-Yr is down 1.2bps at 2.2423%.

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