Trade held more of a risk-off unwind...>

US TSY FLOWS: Trade held more of a risk-off unwind than risk-on all day, Tsys

traded weaker all session but see-sawed off lows late. Volumes moderated (TYU

just over 1M) as Sep/Dec Tsy futures roll has run run it's course (Dec takes

lead Friday).

- Desks citing month end support for equities, improved political outlook for

Italy, while China officials said they would not retaliate to new tariffs -- but

trade tensions could spike at any time. Choppy trade after ECB's Knot, who

states that there is no need to resume QE program.

- Limited react to data, carry-over real$ selling in intermediates to long end,

modest deal-tied selling 3s, two-way in short end to intermediates ahead

extended holiday weekend in US. Early Block sale in 2s, two-way curve trade

w/buyers 3M10Y flattener unwinds. 

- Poor US Tsy $32B 7Y note auction (91288YD6) awarded 1.489% rate vs. 1.468% WI

(previous $32B 7Y awarded 1.967%); 2.16 bid/cover.

- The 2-Yr yield is up 3bps at 1.53%, 5-Yr is up 2.2bps at 1.4012%, 10-Yr is up

2.4bps at 1.5029%, and 30-Yr is down 0bps at 1.9713%.