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Relative calm w/Tsys holding firmer....>

US TSY FLOWS
US TSY FLOWS: Relative calm w/Tsys holding firmer in lead up to FOMC annc,
at/near top end of range on modest volume (TYZ<725k), curves narrowly mixed.
Price consolidation after better selling in rates last two sessions -- just
going through the motions? FOMC deemed low event risk, .25 bps hike largely
foregone conclusion. Main focus on forward guidance w/Fed Chair press conf and
SEP/dots, latter now includes 2021 dot.
- US$ firm but well off morning highs (DXY +.048, 94.182 vs. 94.400H). Little
deal-tied flow, underlying month end support; fast$ 2-way in 2-5s, rate
receiving in 5s, spd curve flatteners in 2s and 5s vs. 10s.
- Ongoing large option trades, heavier buying in EDH0, EDM0 and EDU0 Eurodlr put
spds today have been more supportive for implieds. Eurodollar futures, ongoing
interest in buying EDZ9 vs. EDZ0 as sector holds near 1wk highs (vs. -0.020
inversion last week).
- Tsy cash/ylds: 2Y 99-27 (2.827%), 5Y 99-17.5 (2.972%), 10Y 98-08.5 (3.078%),
30Y 95-28 (3.215%).

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