T-Notes -0-00+ at 128-20+, with small.......>

US TSYS: T-Notes -0-00+ at 128-20+, with small pockets of buying seen in a very

limited Asia-Pac session. To recap, volume remained light on Friday, although

T-Notes managed to rally, going out just off best levels as the curve steepened,

with year-end extension/pension rebalancing flows in focus.

- China's PBoC decided to apply the LPR to existing floating rate loans over the

weekend, BBG believes this could lower the costs of CNY152tn worth of loans come

Jan 1. Elsewhere, eyes were on Middle East tension, as the U.S. military carried

out "defensive strikes" on Kataib Hezbollah facilities after a U.S. civilian

contractor was killed in a rocket attack on an Iraqi military base on Friday.

- Over the weekend the FT suggested that Goldman & JPM "have found ways to keep

trading in the $1.2tn US repo market while limiting regulatory burdens,

potentially easing a cash crunch at the turn of the year." Goldman supposedly

focused on "total return swaps," while JPM engaged in "sponsored repo" ops.

- Focus Monday falls on the Chicago PMI, advance goods trade balance, Dallas Fed

m'fing index & pending home sales. Monday's repo ops from the NY Fed will offer

a maximum of $230bn worth of liquidity ($110bn of which cover year-end).