MNI sources noting good buying.........>

US TSY FLOWS: MNI sources noting good buying around 2.62%/2.625% from both fast

and real money. Most of the buying has been focused in 10's and 30's, with

better selling in 3's and 5's. Market seeing the reverse of the late curve

steepening, however, 48.5bp area looks like a channel resistance level for the

curve on 5-/30-Year spread, so outright plays could have further to run. The

2.62%/2.64% level has been well advertised as an important technical level.

$25bln in corporate issuance seems to have helped push yields to these levels.

- Government shutdown issues are starting to pick up as the Senate may have a

tough time pushing through the current bill. While there still seems to be a

degree of optimism that a deal will be done there are growing concerns and

Senate Majority Leader McConnell didn't sound optimistic earlier today.

- MNI sources note corporate issuance is now presumably behind us for the week

and the potential for problems in Washington they see value buying at these

levels, with a preference for owning 10's on the curve outright. The next target

is a push through 2.639% (high from December), but that there are several

hurdles to clear first.