T-Notes edged higher in Asia, breaching.....>

US TSYS: T-Notes edged higher in Asia, breaching yesterday's peak, as Trump's

latest tweetstorm re: China added to an already cautious tone. Contract +0-03+

at 139-06, with the curve flattening as yields richen by 0.4-2.9bp. 20s still

outperform after Wednesday's solid auction, which triggered a J.P.Morgan

recommendation to go long the belly of the 10s/20s/30s fly.

- The Minutes of the Fed's April meeting revealed "a few participants also noted

that the B/S could be used to reinforce the Committee's fwd guidance regarding

the path of the FFR through purchases of Tsy securities on a scale necessary to

keep Tsy yields at short to medium-term maturities capped at specified levels

for a period of time." This accompanied some broader calls for deeper fwd

guidance. The minutes also noted that "there appeared to be ltd risk that the

FFR would move below the tgt range, as the FHLB - the dominant lenders in the

federal funds market - can earn a zero rate on balances maintained in their a/c

at the Fed." The latter was reaction to market speculation re: an IOER hike.

- Flash PMIs, initial claims and Fedspeak from Powell, Clarida & Williams are

due Thursday.