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Third time is the charm: long end......>

US TSY FLOWS
US TSY FLOWS: Third time is the charm: long end blipped off pre-auction lows
after 30Y stopped out slightly (5/30 yld curve pares gains, +2.010bps at 40.040
vs. 40.998H). All-in-all, pretty quiet, Christmas market malaise coming on with
most risk events out of the way (retail sales Friday) ahead next Wednesday's
final FOMC for 2018 (includes summary of economic projections). Mkt pricing in
25bp hike (despite Pres. Trump tweet/hoping wont raise "anymore"). Though
moderated OIS lvls imply only 1 hike in 2019 vs. nearly 4 a few weeks ago.
- Slow start to day on light volume, many sidelined ahead ECB rate annc -- left
refinance rate unch at 0.00, inflation forecasts broadly in line with previous,
greater emphasis on weaker external demand.
- Flow included two-way positioning w/better selling in long end, some
cross-current hedging vs. Bunds and Gilts, Deal-tied paying vs. $3B UNH 4-part
issue; duration weighted 2s5s flattener block, carry-over rate paying in 2s-5s
(modest receiving in 2s and 10s), net-long vol short Mar Eurodollar put tree
block followed up w/Green Mar put tree buy. Tsy cash/ylds: 2Y 99-31.5 (2.758%),
5Y 100-17.5 (2.754%), 10Y 101-26 (2.911%), 30Y 104-02.5 (3.162%)

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