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*** Rates chopped broadly lower,....>

US TSYS SUMMARY
US TSYS SUMMARY: *** Rates chopped broadly lower, curves marching steeper amid
heavy volume again (TYH>1.3M) largely occurring in first half. Notable, equities
came under heavy pressure (eminis off lows into midday -30.0 to 2823.5) amid
varying opinions of over-valuations and talk of portfolio rebalance/buy
stocks-sell Tsy positioning. ECB Knot reiterated QE tapering comments, while Tsy
Sec Mnuchin underscored (if not reiterating) Trump admin's wishes of strong US$.
- Relative quiet midday, rates look to revisit lows as accts hit sidelines ahead
Tue's evening POTUS State of Union Address, followed by Wed's FOMC and Fri's NFP
event risk. Muted react to second tier data, short end remained buoyed all day
- On first half sell-off to new session lows, sources reported stop-outs in 30s
latest flush lower, prop and real$ selling in 10s and 30s, prop flattener
unwinds. Fast$, prop acct buying on lows. Large buying >50k EDH8 98.13 (+0.010)
underpinned short Eurodollar futures.
- OTC and exchange traded option vol perked up briefly, VIX vol index tapped
15.42 (+1.60) first time since mid August. Heavy FI option volume, ongoing long
put profit taking, others added quarterly rate hike insurance.

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