Strong start in rates and equities.....>

US TSY FLOWS: Strong start in rates and equities for 2020. Potential for

"preemptive strike" vs. Iranian militia headlines (US Defense Sec. Esper)

apparently lent to  risk-off/haven bid in Tsys, equities had a choppy session

but look to extend new high in late trade (ESH0 +20 at 3251.0). Volumes much

improved (TYH>1.1m) vs. prior holiday levels. Yld curves continue to bull

flatten.

- Sources reported central bank sales in short end, two-way in intermediates to

long end w/bank buying long end last couple hours. Block buy Eurodlr Greens

- Swap spds collapsed earlier, appears Dec move a little overdone. After hitting

widest levels in 7 months Tuesday (and making move over 3 week period: from near

inversion on Dec 10 to nearly +12.0 Tues), spd curve steepening as Tsy

yld curves bull flatten. Surge in swap-tied flow underscore move w/better rate

receiving in 2s, 3s, 4s, 5s and 7s, 2s10s steepener, 3s4s5s receiver fly. Dearth

of deal-tied flow so far.

- The 2-Yr yield is up 0.2bps at 1.571%, 5-Yr is down 2.8bps at 1.6632%, 10-Yr

is down 4.2bps at 1.8754%, and 30-Yr is down 5.7bps at 2.3326%.