Risk-off support in rates continued....>

US TSY FLOWS: Risk-off support in rates continued as equities made new lows (SPX

2687.5 late). Heavy futures volume by the bell (TYZ>2.1M) w/pace moderating in

second half. Rates had trimmed gains around midday as equities bounced off lows.

- Pick-up in data, multiple Fed speakers. Well below exp September new home

sales -5.5% to 553k SAAR also supportive. Fed Beige Book: Overall growth 'modest

to moderate,' a slight downgrade from last Beige Book. Ongoing exogenous

factors: Italian budget angst and hard Brexit concerns.

- Flow through midday included various acct sellers of 10's, forward rollers

into WI 5s, fast$ 5-30 flatteners fading two-day move. Moderate deal-tied flow

and pre-auction short sets ahead the $39B 5Y auction. Heavy option volume w/flow

more mixed after better upside call buying Tue.

- Fed's Kaplan sees three hikes through end of 2019; Fed Bostic, "US Economy

"`CHUGGING ALONG QUITE WELL'".

- Decent $39B 5Y note auction, awarded 2.977% rate vs. 2.980% WI (awarded 2.997%

in Sep; 2.524% avg. Tsy cash/ylds: 2Y 100-01.5 (2.847%), 5Y 99-20.5 (2.952%),

10Y 97-31.5 (3.113%), 30Y 93-19.5 (3.338%).