Rates bid but off midday highs, Tsy....>

US TSY FLOWS: Rates bid but off midday highs, Tsy futures marched marched past

Tue's post-ISM highs to levels not seen since Sep 10, 10YY slipped to session

low of 1.5786, 30YY 2.0649%. Risk-off tone underscored by weak global equities,

S&Ps -63.0 early in second half, Gold climbs back over 1500.0 (+23.0), modest

unwinds in late trade. Little market react from Fed speakers Barkin, Harker and

Williams. WTO annc US can impose $7.5B tariffs re: Airbus dispute.

- Flow included swap-tied selling short end, prop and fast$ selling

intermediates,light prop and real$ sales long end last half hour as Tsys paring

first half gains some deal-tied selling in the mix. 

- Short end grinds higher -- session highs as chances of two more rate cuts by

year end come back in focus: Oct 30 chances have see sawed around mid 90% to

100% for weeks, while chances for Dec cut back around 45%. Options trade has not

really woken up to take advantage of lead up/or current levels, many plying

sidelines ahead Fri's NFP.

- The 2-Yr yield is down 6.6bps at 1.48%, 5-Yr is down 6bps at 1.43%, 10-Yr is

down 4bps at 1.5957%, and 30-Yr is down 0.7bps at 2.0856%.