Rates holding weaker levels by......>

US TSYS SUMMARY: Rates holding weaker levels by the bell, off early lows on

moderate volume (TYM appr 1M); 10YY>3.0%. US$ index pared gains (DXY -.058,

93.062; US$/Yen 109.718); equities stronger (emini +27.0, 2697.25) as West Texas

crude vaults to new high of 71.36 (late 2014 lvls), currently +2.10, 71.16; gold

weaker (XAU -2.16, 1312.39).

- Pretty quiet trade on net, focus on Thu's CPI (0.2% m-o-m/est) after PPI

climbed 0.1%, suggests inflation slowed after strong Mar showing; Mar wholesale

inv +0.3%, below the +0.5% in the adv est. Atl Fed Pres Bostic: inflation likely

to run above 2% "for a while". Bostic added that concerns of trade war between

US and allies were "overshadowing" positive effect of "tax cuts".

- Two-way flow after better early selling in long end, modest deal-tied flow,

pre-auction short set/unwind. Decent option volume on mixed trade that favored

downside put buying over calls, particularly in late 2020 sector of curve.

- $25B 10Y auction awarded 2.995% rate (2.795% in April after March auction

awarded 2.889%); 10YY tapped 3.0117% O/N. Quiet second half trade

- Tsy ylds: 2Y 2.530%, 3Y 2.682%, 5Y 2.838%, 7Y 2.957%, 10Y 3.002%, 30Y 3.156%