*** Rates finish sharply lower, kick...>

US TSY FLOWS: *** Rates finish sharply lower, kick from higher than expected ADP

private employ (+230k vs. +185K est), but ISM services PMI (61.6; biz index

65.2) w/largest two month increase on record -- spurred renewed selling through

second half. 

- Stops triggered on way down as Tsy ylds climbed to highest lvls in years

(10Y), curve flattener unwinds in 2s and 5s vs. 30s, receivers, payer unwinds in

5s and 10s, decent deal-tied selling in mix.

- Anecdotal comment from long-time market watcher on sell-off: "If I were a

voting member of FOMC I would want rates up good bit higher than today. I think

next recession is going to be brutal unless Fed has ample room to cut. Yield

curve be damned." Source added it's "easy to see next recession will be squarely

on Fed's shoulders. There won't be any fiscal room to maneuver." 

- Much better selling on way down, rather heavy put buying in Eurodollar and Tsy

options, implied vol not consistently higher.

- Tsy cash/ylds: 2Y 99-25.5 (2.854%), 5Y 99-10 (3.023%), 10Y 97-18.5 (3.161%),

30Y 94-01 (3.315%).