*** Risk-off, risk-on back to.......>

US TSYS SUMMARY: *** Risk-off, risk-on back to risk-off again. Desks cited

chatter from Japan on N Korea gearing up for another missile test (out earlier)

spurred recent safe-haven bid in 10s and 30s. Gold surged (XAU +8.5 1297.30),

US$ near lows vs. Yen (110.862) Tsys have rebounded, trades mildly higher on

two-way flow heading into Tsy auctions (dual 2- and 5Y note supply to avert

month end issues.) strong 2Y drew 1.765% rate, 60.5% indirects.

* Artificially heavy volume in Tsy futures -- tied to large pick-up in rolling

from Dec to March futures ahead Thus first notice date (March goes top step, Dec

expires mid/late Dec)

* Early flow included large Block (+22.9k TYH, 124-24 helping spur early rally),

FX-tied bid as US$ weaker vs. yen, Bund-tied aid, but also pre-auctions shorts

and rate-lock hedges too amid today's 2Y, 5Y auctions and a busy high-grade

corporate bond issuance wk. Fast$ and prop acct buying before rates reversed

early gains; Mar 10Y-ultra Block sale (-7.9k, 133-30) helped trigger selling. 

* Swap spds tighter, spd curve flatter with long end breaking out of session

range, extending inversion. Flow from last hour includes.