*** Rates chopped lower/finish......>

US TSYS SUMMARY: *** Rates chopped lower/finish off lows, curves off highs, late

squaring ahead tonight's State of Union address by Pres Trump. Notable, equities

came under heavy pressure (eminis 2818.5 low late morning) 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$.

- Rates made new intra-day lows second half on thin trade, accts hit sidelines

ahead event risk, SoU address, Wed's FOMC and Fri's NFP. Muted react to second

tier data, short end remained buoyed all day. Earlier, 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.

- Late ylds: 2Y 2.124%, 3Y 2.261%, 5Y 2.509%, 7Y 2.655%, 10Y 2.725%, 30Y 2.976%