Tech Sell-Off Dominates Narrative

USTs have rallied and the curve has bull flattened on the day alongside a broad dollar rally and sell-off in equities (fuelled in part by the correction in tech stocks).

• The UST rally lost some momentum later in the session, but most of the earlier gains have been held. TYZ0 trades at 139-11+, towards the top-end of the day's range (L: 139-02+ / H: 139-16+).
• Cash yields are 1-5bp lower across much of the curve with the 2s30s spread 5bp narrower. Last yields: 2-year 0.1408%, 5-year 0.2721%, 10-year 0.6853%, 30-year 1.4239%.
• The NFI Small Business Optimism index for August came in above expectations at 100.2 vs 99.0 survey.
• A deterioration in Brexit talks following the UK government's indication that it could break international law to pass new legislation that would undermine parts of the Withdrawal Agreement, has added to the global risk-off mood.
• Looking ahead, the ECB will meet on Thursday but no material change in policy, or spillovers to USTs, are expected.