### POV, Tsys are getting hammered today....>

US TSYS: ### POV, Tsys are getting hammered today (10Y yld +.0534, 2.3810),

curves have rebounded off 10+ year flats (2s10s +3.341, 61.108; 5s30s +1.659,

71.392; 2s30s +4.140, 108.984). Seems ironic to have another strong on trade

occurring (strong equities, strong US$, weaker gold) the day after North Korea

launches another missile across Japan's bow and brags about nuclear ICBM

capability. Early sell impetus was triggered after prepared remarks from Fed

chair Yellen painted a rosy picture of economy overall as GDP has "stepped up"

despite effects of multiple hurricane effects. Despite below target inflation,

Fed Yellen expects gradual rate increases to be appropriate. Rate hike

probability for Dec 13 FOMC holds just below 100% (MNI PINCH), while March 21

hike probability has climbed to 62.5 from 54.1% a week ago. However, rates are

currently under-pricing further chances of rate hikes out the curve (3-4 more in

'18 according to some dealers) especially if economy continues to improve.

Normal for mkts to discount this, pricing in uncertainty. Nevertheless, accts

are migrating off the sidelines today, taking advantage of cheaper implieds to

buy rate hike insurance via low delta puts.