T-Notes failed top challenge yesterday's....>

US TSYS: T-Notes failed top challenge yesterday's low overnight, even with the

S&P 500 e-mini futures setting a fresh all time high during Asia-Pacific hours.

- Regional players may have been happy to fade yesterday's Tsy sell off/take

profit on the move. Curve steepening had of course been the name of the game in

the last couple of sessions, aided by perceptions surrounding a Fed rate cut,

U.S. CPI data and a very weak 30-Year auction yesterday (after a soft 10-Year

offering Wednesday). The 3-Month/10-Year spread briefly turned positiveon

Thursday, a feat it hadn't managed achieve since May.

- T-Notes last -0-02+ at 126-29, sticking to a tight range, with yields 0.7-1.2

bp lower across the curve.

- The main interest in terms of flow came through upside plays via USQ9 157.50 &

158.00 calls.

- Eurodollar futures trade 1.0 tick lower to 1.0 tick higher through the reds.

- Focus turns to U.S. PPI data and comments from Fed's Evans later today.