Surprise! Tsys trade weaker, yld.......>

US TSY FLOWS: Surprise! Tsys trade weaker, yld curves rebound after extending

Wed's sharp flattening for much of session. Tsys bid evaporated late.

- Surprising second half action. A year without a Santa Clause rally? Equities

made new session lows SPX -55.5 at 2448.25 (down appr 8% for year). Traders

looked for Tsys to catch more of a risk-off bid; rather muted trade, however,

many have drifted towards exits earlier. 

- Gold making new highs, XAU +23.0 and change, >1266.0, while US$ index extends

session low (DXY -0.849 at 96.186); CBoE vol index made new high of 30.30

(+4.72), blowing past Oct 11 high of 28.84, but still off the epic rally high

from early February when index spiked to 50.30.

- NOT quite risk-off -- SELL everything Mortimer! Potential risk-parity acct

unwind (sell both Tsys and Eqs' as has been cited last month. Eqs' drew buying

on lows, SPX bouncing by more than 20.0 off lows but slipped lower late.

Unexpected (?) news that Pres Trump will NOT sign stopgap spend bill and recent

comments from Fed Dudley adding to move. Tsy cash/ylds: 2Y 100-05 (2.666%), 5Y

101-01 (2.651%), 10Y 102-27.5 (2.790%), 30Y 106-31.5 (3.019%)