*** The week's curve flattening........>

US TSY FLOWS: *** The week's curve flattening rally took a break Thursday, Tsys

opened/held mildly lower levels into midday - a modest rebound for curve off 10

year lows (2s/10s +.883 to 64.357 vs. 65.121H). Moderate risk-off unwind,

cautious risk-on tone with equities rebounding.

- Tsys opened with moderately heavy volume, TYZ>400k with volume moderating into

midday. Little react to weekly claims (+10k to 249k) and import price, focus

more on House tax bill vote. Oct IP production surged +0.9 vs. expected rise of

+0.5%. Fed's Mester sees economy and inflation picking up.

- Eurodollar futures lower, heavy short end volume/sales EDZ8 after 3M LIBOR

climbed +0.0138 to 1.4357% (+0.0198/wk); large -12.5k EDH9 1Y bundle block sales

-0.027-0.030.

- Swap spds mildly wider amid light paying by fast$ in forwards (outright,

switch and flys). Light corporate issuance adding to move, supply expected to

evaporate heading into Thanksgiving holiday.

- Tsys held lower range post $11B 10Y TIPS reopen that drew 0.512% rate and

in-line/good 69.04% indirects.