Risk-off unwind theme, squaring........>

US TSY FLOWS: Risk-off unwind theme, squaring ahead Wed's FOMC rate annc, mkt

concerns over Wuhan virus' sprd normalizing slightly despite report of new case

in France. Yld curves steeper, rebounding after Tsys reversed early gains.

- Futures were trading stronger during London morning after headlines that Hong

Kong to limit mainland flights and shut high-speed rail spurred gap bid (early

October low ylds: 10YY tapped 1.5685; 30YY 2.0211% low), but unwinds triggered

just ahead NY open on some headlines attempting to squelch concerns over

severity of and potential for epidemic. 

- Flow included two-way from props and fast$ in 2s-5s, option-tied selling in

10s, real$ selling 30s. On earlier bid, bank portfolio and real$ were buyers of

intermediates to long end, swap-tied sellers in 2s and 10s. $6.25B corp issuance

hedging from 3s out to 50s. US Tsy $32B 7Y Note auction tailed: 1.570% award vs.

1.567% WI. Large steepener block: +14,236 FVH 119-20 through the 119-20.25

post-time bid vs. -2,018 WNH 190-18 WAY through the 190-23 post time bid. 

- The 2-Yr yield is up 1.8bps at 1.4585%, 5-Yr is up 2.8bps at 1.4693%, 10-Yr is

up 4bps at 1.6476%, and 30-Yr is up 4.3bps at 2.0995%.