T-Notes 0-08 vs. settlement at 130-00+......>

US TSYS: T-Notes 0-08 vs. settlement at 130-00+. The contract ground higher in

NY trade, reversing a chunk of the sell-off observed in Asia hours, even as the

S&P added 1.3% in cash trade. The cash space was subjected to some twist

flattening, with 2s underperforming & a TU/TY flattener block underscoring.

- Fed voter & dove Bullard helped to cool the odds of a 50bp rate cut in Sep,

pointing to data dependence & a desire to wait and see how last month's rate cut

feeds through. Bullard also noted that the Fed shouldn't react to every tit for

tat move in the Sino-U.S. trade spat. Bullard also reiterated that he supports

one more 25bp rate cut by end '19. White House trade advisor Navarro was a

little more aggressive, calling for a further 75-100bp of rate cuts by year end.

- Heavy option & related hedging flow on the day, better buyers of downside

puts, upside call sellers, though some ZIRP insurance hedging persisted.

- $13bn Occidental Petroleum jumbo 10-tranche lead the day's supply.

- The latest 3-Year Note auction was virtually on the screws & was solid enough.

- Fed's Evans headlines the docket on Wednesday, with 10-Year supply also due.