Treasuries ended Tuesday's overnight...>

US TSY/RECAP: Treasuries ended Tuesday's overnight session weaker after a mixed

$26B 2Y auction occurred shortly after Fed Chair Yellen spoke saying inflation

uncertainties call for gradual rate moves but hiking too slowly risks a

overheated labor market; also she said market should expect inflation overshoot

with symmetric target (2% not ceiling.) 

- Two-yr auction drew 1.463% rate, moderate/low 44.15% indirects, but very

strong 19.04% directs (most since Feb. 2017). - Tsys opened mildly lower, light

volume, long end on/off bid ahead of open. Fed Kashkari said late Monday hiking

rates while inflation remains weak is a mistake. 

- Little reaction to data, Redbk Sep store sales unchanged, Case-Shiller home

price index +0.3 M/M. MBS tightened earlier. TIPS underperformed nominal Tsys. 

- Strong US$ vs Yen spurred FX-acct selling in Tsys, corporate/auction

concession, duration selling in morning. Mild 2way flow with better selling

midmorning. US swaps ended mostly tighter, light swap-tied paying short end,

spread flatteners, steepeners out curve. 

- Tsys open Asia 125-30 down 2 ticks, 10-Year Yield last at 2.236.