Tsy near late session highs after......>

US TSY FLOWS: Tsy near late session highs after the bell amid heavy month-end

buying (TYM>200k from 123-21 to -22; >120k FVM from 115-20 to -21). Curves

mostly adding to Mon's bear steepening, 3M10Y flatter. Relative quiet at start

of two-day FOMC. 

- Early blocks included ongoing FVM selling, 5s10s flatteners -- reversed late

on month end bid. Tsys surged well ahead of large PMI miss (52.6 vs. 58.5

est),large equity sell program added to rate bid but equities recovered from

late morning on (SPX +2.0 late at 2945.0).

- Swaps wider amid better rate paying and deal-tied flow, some receiver unwinds

and two-way fly trade in fronts to intermediates. Other buying/short unwinds as

EFFR climbed to 2.45%, spurring increased chatter of IOER cut.

- On tap for Wednesday: MBA Mortgage Applications; ADP private payrolls; Markit

Mfg Index (final); construction spending; ISM Manufacturing Index; NA-made light

vehicle sales SAAR; FOMC policy announcement.

- The 2-Yr yield is down 2.6bps at 2.2661%, 5-Yr is down 3.3bps at 2.2783%,

10-Yr is down 2.3bps at 2.5018%, and 30-Yr is down 2.4bps at 2.9311%.