Though telegraphed earlier, mkt........>

US TSY FLOWS: Though telegraphed earlier, mkt reacted positively to headline:

"U.S. NEGOTIATORS TO HEAD TO CHINA MONDAY FOR FACE-TO-FACE TALKS." bbg.

Knee-jerk react w/little substance to headlines, markets reacted positively

anyway, equities surged to session highs (3,006.75, +17.75) Tsys fell back to

midmorning lows. Note: 3M10Y Tsy yld curve back in positive territory (+4.668,

1.665 (L: -4.54 / H: 2.27) after gapping lower before the NY open.

- Sources reported two-way flow across the curve, recent short end buyers

covering shorts in 2s. Earlier weakness tied to United Healthcare issuance

($5.5B launched in second half), dealer +30s, fast$ and props doing steepeners

as long end sold off earlier, option-tied buying in 10s and 30s.

- US Tsy $40B 2Y note auction (9128287F1) awarded a 1.825% rate (1.695% on prior

$40B June auction) vs. 1.822% WI, bid/cover 2.50 vs. 2.58 previous (2.83 avg). 

- The 2-Yr yield is up 2.1bps at 1.8333%, 5-Yr is up 1.8bps at 1.8214%, 10-Yr is

up 2.4bps at 2.0707%, and 30-Yr is up 3.6bps at 2.6069%.