The cocktail of heightened trade tensions...>

US TSYS: The cocktail of heightened trade tensions between Australia & China

(that the Australian Trade Min tried to play down as technical issue), as well

as the continued Sino-U.S. hostilities roiled risk appetite overnight,

supporting core global FI, with further worry coming via signs that COVID-19 is

spreading in areas away from the major cities on either of the major U.S.

coastlines & continued unease re: the virus in Asia. T-Notes comfortably bid as

a result, last +0-06 at 138-26 (avg. volume of ~65K), off highs, as the curve

bull flattens (yields 0.3-1.5bp richer across the curve). Flow-wise, the

highlight was a 15K block TY package. A mkt source noted that the package looked

like buyer of the TYN0 138.00/136.50 put spread vs the 140.50 call, and seller

of the TYM0 138.00/136.50 put spread", with the latter being rolled further out.

- Monday's 3-Year auction was solid, slightly > avg. cover ratio, normal

takedown metrics & a marginal stop through WI. Monday also saw heavy IG

issuance, aiding bear steepening. Fedspeak takes focus today, with Bullard,

Kashkari, Harker, Quarles & Mester due, in the wake of a push back vs. negative

rates. We will also see CPI & avg. earnings data, as well as 10-Year supply.