T-Notes operated near the bottom of....>

US TSY/RECAP: T-Notes operated near the bottom of their tight range in the U.S.

afternoon, jolting lower late on owing to a WSJ headline that suggested Tsy Sec

Mnuchin was discussing lift of some/or all China tariffs. Took less than 10

minutes for the retract from Tsy spokesperson: "neither Sec Mnuchin nor TR

Lighthizer have made any recommendations to anyone with respect to tariffs or

other parts of the negotiation." T-Notes closed off worst levels but not too far

from the late lows, with volume jumping on the move.

- Cash trade saw the long end outperform, with the curve flatter as a result.

- Fed's Evans stressed that the Fed can easily be patient, in a good position

now. Fed's Quarles noted that inflation remains very well contained.

- Light flow included two-way in shorts to intermediates, fast$ unwinding early

buys in 2s, deal-tied selling, two-way option -tied hedges as well. Early

swap-tied selling 2s-10s. Solid 10-Year TIPS auction awarded high yield of

0.919%, indirects took 69.07 of competitives.

- Focus Friday turns to Fed's Harker & Williams, with UoM confidence also due.

- T-Notes last 121.17, U.S. 10-Year cash Tsy yields closed at 2.750%.