T-Notes operate just shy of Monday's........>

US TSYS: T-Notes operate just shy of Monday's highs, after the contract closed

just off best levels. U.S.-China trade matters dominated news flow & price

action. China outlined its retaliation to the latest tariffs imposed by the

U.S., with the U.S. TR setting out the process to potentially impose a further

set of tariffs in future. Chinese state media has adopted a harder line re:

trade; a state-TV video summarising the Chinese policymakers' view on the trade

war went viral, while the EIC of China's Global times noted that "China may stop

purchasing US agricultural products and energy, reduce Boeing orders and

restrict US service trade with China. Many Chinese scholars are discussing the

possibility of dumping U.S. Treasuries and how to do it specifically." The space

moved back from best levels as U.S. Tsy Sec Mnuchin noted that talks between the

superpowers are ongoing, while Trump said that he hasn't made a final decision

re: tariffs on another $325bn worth of Chinese goods & that he will meet with Xi

at the G20 summit. Fedpseak reiterated the current patient/cautious stance.

- Jun/Sep rolls accelerated, with decent swap-tied buying across the curve.

- T-Notes last 124.14, U.S. 10-Year cash Tsy yields closed at 2.402%.