Tsy futures trading mixed in........>

US TSYS SUMMARY: Tsy futures trading mixed in second half trade, curve continues

to flatten as bonds rebounds, near late session highs after lower open (2s10s

-2.912, 53.287; 5s30s -3.881, 58.059 -- new 10-year lows). Relatively muted

trade ahead Wed's ADP/Fri's NFP e,ploy data, discounted. Short-term tactical

focus more on position squaring in futures and options ahead Friday's debt limit

-- recent risk-off flurry on back of wires reporting House Rules committee will

not meet on interim spending bill. Short end remained under pressure all day.

- Little react to early data, light short covering as Oct trade deficit widened

to -$48.7b vs -$47.5 exp. Modest deal-tied flow, better front end rate

receivers, spd curve steepeners into Tsy flattening, curve flatteners in 2s vs.

10s and 30s, 5s and 3s vs 30s, outright buying in 30s, real$ and bank

portfolios.

- Gold hammered earlier (XAU -12.90 1263.21), similar to week ago flow -- $1B

nominal seller that dropped gold unexpectedly. timing of last week's sell-off

coincided with chatter over large mid-East/Saudi acct cashing in. The latest

move certainly does NOT appear related to a relatively small blip higher in US$.