Treasuries declined Wed overnight on...>

US TSY/RECAP: Treasuries declined Wed overnight on selloff on tax reform and

hawkish Fed Chair Yellen, corporate rate lock hedges, then weak in NY but

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

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

- Overnight bear steepening, US$ gains, weak Bunds, and then sell-stops hit.

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

corp and Tsy supply hedges; 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 Bids

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 open Asia 125-13, 10-Year yields last flat at 2.310.