Treasuries declined Wed overnight...>

US TSYS SUMMARY: Treasuries declined Wed overnight on selloff on tax

reform/hawkish Fed Chr Yellen, corporate rate lock hedges, then weak in NY but

stabilized. Mixed $13B 2Y FRN reopening but good $34B 5Y auctn; some cited

precautionary real$ sales into qtrend Fri. Pres. Trump shd speak 3:15pm ET on

taxes. 

- O/night bear steepening, US$ gains, weak Bunds, and then sell-stops hit. Tsys

then dipped on 1.75% Aug durable gds, CTA sell stops hit in 2Y, 5Y, 10Ys; corp

and Tsy supply hedges; bk and insurer sales in 10Y, 30Y. Fast$, prop buying on

dips, insurer 10Y sales. 

- Huge block post snuck into lineup by CME: a 10Y/Ultra Tsy futures steepener

blocked at 9:25:04am ET: buy 52K TYZ at 125-16.5 vs. sale of 14K WNZ Ultra Bds

at 165-11, about $4M DVO1; aided 10Ys, FX-tied bid too as yen regained ground. 

- Strong 5Y: 1.911%, high 69.6% indirects, 0K 7.1% directs, left only small

23.3% for dealers. Mixed/soft 2Y FRN reopen: 5.5 bps discount margin, weak 47.1%

indirects, no directs, 52.9% left for dealers. TSYS 3PM ET: 2Y 1.482%, 3Y

1.605%, 5Y 1.909%, 7Y 2.138%, 10Y 2.309%, 30Y 2.862%.