T-Notes legged higher into the NY close.....>

US TSYS: T-Notes legged higher into the NY close on the back of hawkish trade

rhetoric from U.S. Tsy Sec Mnuchin & TR Lighthizer. T-Notes moved back from best

levels in Asian hours, drawing modest support from a Global Times op-ed which

suggested that China is "ready for a temporary breakdown" in the U.S. trade

talks, before the RBA left its cash rate unchanged, adding some modest weight to

Tsys in the process. Modest twist steepening has been seen in the cash space.

- Fed non-voter Kaplan told BBG that "U.S. interest rates are in the right place

and don't need to be lowered, although weak inflation merits close watching,"

during Asia-Pac hours.

- Overnight option flow has seen put exposure rolled into TYN9 & the TYN9

123.00/122.00 put spread blocked. There has also been some upside focus, with

the 2MK9 124.25/126.00 1x2 call spread bought on block.

- Eurodollar futures trade 0.5-2.5 tick higher through the reds. There was some

long interest in the OEN9 97.75 puts overnight.

- Fed's Kaplan & Quarles will speak today, with 3-Year supply due.

- T-Notes last 123.25+, cash 10-Year Tsy yields last at 2.478%.