*** Risk-on takes a break today,....>

US TSYS SUMMARY: *** Risk-on takes a break today, Tsy futures trading higher by

midday, well off first-half highs on decent volume (TYZ>960k). Long end bounce

from mid-wk rout, 30y yld 2.822%, 10y yld 2.312%.

- Heavy volume by the open (TYZ>465k) as stocks receded from record highs,

profit taking more than a systemic shift in sentiment - exogenous factors

remain: N. Korea nuclear saber rattling, Catalan/Spain rift, tax reform

uncertainty. Mkts waiting for word of Pres Trump meet w/Fed chair Yellen,

chances of reappointment appr 24%, Powell still ahead at 44% (PredictIt).

- Not a strong react to early data, Tsys inched higher after topping overnight

highs in long end prior to data release. Flow included better buying in 10s-30s

from prop, real$ and bank portfolios, FX-tied buying as US$ softened vs. Yen.

Chatter of asset allocation out of stocks into Tsys. Volume tapered off into

midday/ahead $5b TIPS R/O.

- Swap curve holding flatter on relatively narrow range. In addition to some

light deal-tied hedging, recent flow includes 5s10s spd flattener, 5s7s10s fly,

paying the belly, small payer in 4Y at 1.9825%.