Tsys gapped bid early -- and traded....>

US TSY FLOWS: Tsys gapped bid early -- and traded sideways through the rest of

the session. Terrible time for a year-end extension grab if you have an ax to

grind with markets so thin. (TYH volume under 550k by the bell). Two-way ahead

weekend and better data flow next wk includes Chicago PMI, home sales on Mon

(48.0 est), consumer conf Tue, ISM and FOMC minutes Fri.

- Swap spds wider, short end extending move amid better rate and spd paying in

2s-5s in midday, receivers in 10s and 30s keeping longer spds anchored. Yld

curves have normalized last few wks off lows, 3M10Y gels around low-mid 30s,

2s30s in high 60s/low 70s. If mkt sees more positive data in 2020 (minus

political risks) yld curves likely to push steeper.

- Mkt mirrors latest FOMC DOT plot where 13 out of 17 participants do not see

another cut in 2020. That said some option accts starting to hedge rate CUTS

again around mid 2020 (futures NOT pricing that in, but some spec option accts

are buying puts for hedge). The 2-Yr yield is down 4.6bps at 1.5852%, 5-Yr is

down 4.3bps at 1.6764%, 10-Yr is down 2.4bps at 1.87%, and 30-Yr is down 1.4bps

at 2.3081%.