Rates trade well bid again after the...>

US TSY FLOWS: Rates trade well bid again after the bell, near early session

highs after midmorning unwind of risk-off tone that kicked off overnight.

Risk-off support after weekend Saudi oil field drone attacks, supply disruption

supporting oil (WTI >+7.5, 62.35), gold > 1502.0. Late headlines that Saudi

Aramco had already brought appr 40% of it's production back on-line -- current

bid in crude may be overdone (unless bid reflects potential for future attacks).

- Risk-off/short cover support across curve, supportive of 25bp cut this week as

well as in late October (third hike probability >45% on Oct 30). Short end desks

note jump in O/N repo jump, but saw most likely tied to corp tax obligations and

Tsy auctions. Flow included deal-tied hedging on >$8B high grade issuance, real$

buying 10s, 3M10Y flatteners after recession indicator climbed 50bp off inverted

lows over past couple weeks, two-way flow in first half -- positioning ahead of

Wed's FOMC annc. Decent selling FFV futures, buying of upside Oct Eurdlr option

spds targeting another hike at Oct 30FOMC.

- The 2-Yr yield is down 4.9bps at 1.7511%, 5-Yr is down 5.8bps at 1.6924%,

10-Yr is down 5.8bps at 1.838%, and 30-Yr is down 6.4bps at 2.3073%.