Strong risk-off bid for rates all......>

US TSY FLOWS: Strong risk-off bid for rates all session, kicked off early London

trade on headlines that China officials doubt long-term (phase 2) deal w/US.

Kicking rates higher midmorning: Chicago Business Barometer fell 3.9 points to

43.2 in October, the lowest level since December 2015. Sights now on Fri's Oct

NFP if data comes in anywhere near Sep (+136k), or there are strong up-revisions

(unlikely) to prior, Tsys are going to reverse current levels.

- Sources reported prop and real$ buying 10s, small 3M10Y steepener unwinds put

on earlier in week. Eurodollar futures climbed higher as well post data, lead

quarterly gained +0.030 as rate cut chances for year end gather momentum day

after Fed dropped rate for third time this year. Bbg model showed 31.5% vs. 25%

pre-open. Option flows leaning towards better upside call buying.

- Large midday Block buying 2s, 5s and 10s underpinned futures while

market-on-close month-end flow saw Tsys retrace slightly, mixed curve flow,

light corporate hedging. The 2-Yr yield is down 7.6bps at 1.5219%, 5-Yr is down

9bps at 1.5163%, 10-Yr is down 8.4bps at 1.6875%, and 30-Yr is down 7.5bps at

2.1776%.