Rates doubled down on an strong........>

US TSY FLOWS: Rates doubled down on an strong risk-on first triggered early

overnight on headlines that US/China trade talks to resume in early October in

DC. 

- Rates cratered/extended the rout (30YY +.096 at 2.0659%, Aug 23 lvl) on

midmorning data: US ISM NON-MFG COMPOSITE INDEX 56.4 AUG VS 53.7 JUL and July

factory orders above-expected +1.4%. This after better than expected ADP private

employ gain of +195k ahead of Fri's non-farm data (+160 consensus) w/a handful

of economists upping their est's to +170k-180k after today's ripper.

- Equities rallied (ESU9 tapped 2986.5 high before settling in at 2977.0), while

Gold fell 44.0 to 1506.23 low before bouncing back to 1518.0 in late trade.

- Session flow included fast$ and prop acct buying lows, 3M10Y flattener unwids,

sporadic short covering through session, fast$ +10s, decent deal-tied hedging

for third consecutive session ($13.1B high grade issuance on day, $63.45B/Wk);

swap-tied buying short end, payers out the curve adding to pressure. The 2-Yr

yield is up 11bps at 1.5421%, 5-Yr is up 11.9bps at 1.4374%, 10-Yr is up 10.3bps

at 1.5687%, and 30-Yr is up 9.1bps at 2.0605%.