Tsy futures trading higher/off top.....>

US TSY FLOWS: Tsy futures trading higher/off top of range in modest rebound from

midweek curve steepening sell-off. Heavy volume (TYZ>435k) as stocks recede from

record highs, profit taking more than a systemic shift in sentiment (exogenous

factors remain: N. Korea nuclear saber rattling, Catalan/Spain rift, tax reform

uncertainty). Equities lower (emini -11.5, 2548.5), gold rebound (+5.63,

1286.68), oil weaker (WTI -0.67, 51.37).

- Asia, opened steady/mixed, holding narrow range much of session, going bid

after London open. Sources noted mixed flow, foreign central bank buying short

end,  buying in 5s, selling out the curve, regional bank and macro fund selling.

- London, better buying kicked in early, Spain/Catalan situation spurring

risk-on unwinds. New Zealand currency saw some volatility as NZ government said

it will form a coalition government. Sources reported asset allocation out of

equities into Tsys, macro fund bought Tsys, bank portfolio 2-way in 10s. 

- Swaps, spds running wider, spd curve flatter, risk-off tone outweighing

deal-tied compression. Fast$ mild rate payers 2s-5s.

- Eurodollar, trades firmer/near highs, reversing Wed's sale. 3M LIBOR steady.