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

US TSY/RECAP: Risk-off support in rates continued on Thurs, with the DJIA & S&P

500 erasing their YTD gains. Heavy futures volume noted, as the belly of the

cash curve outperformed, after a high volume Asia-Pac cash session. Heavy Tsy

option volume noted, flow more mixed after better upside call buying Tues.

- On the data front Sep new home sales was well below exp. 

- Turning to the Fed, the latest Beige Book was released stating: Overall growth

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

factors were mentioned. Fed's Kaplan sees three hikes through end of 2019; Fed

Bostic noted that the U.S. economy is "chugging along quite well," while the

hawkish Mester stuck to script.

- The latest 5-Year auction tailed by 0.6bp, with a lack of concession and

increase in auction size weighing. Dealer participation jumped, as direct

takedown cratered, while the cover ratio edged lower.

- There was some focus on Fed Fund futures convergence with IOER.

- Thurs brings durables goods data, along with Fedspeak from Clarida & Brainard.

- T-Notes last 118.27, U.S. 10-Year cash Tsy yields closed at 3.103%.