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Tsys hold weaker levels in quiet.......>

US TSY FLOWS
US TSY FLOWS: Tsys hold weaker levels in quiet second half trade, near lows
after midday chop, modest volume (multiple Asia-Pacific holiday closures next 2
days). No data to speak of, $37B 2Y Note tailed slightly -- awarded a 2.829%
rate (2.655% previous) vs. 2.824% WI, bid/cover 2.44 vs. 2.89 previous.
- Tsys extended session lows on early ECB Draghi comments: "vigorous" underlying
inflation pick-up weighed on EGBS. Sale short lived, risk-off tone heated up,
heavy short end buying w/>80k TUZ from 105-10.75 to -11.75(despite $37B 2Y
auction today); +80k BLOCK EDZ 97.34. Timing around EGB rally as Italy shares,
rates vs. Bunds widened. 
- Real trigger was Axios headline AG Rosenstein gave verbal resignation to WH
staffer Kelly. Flow: short covering volume across curve (steepener unwinds as
well) w/equities sagging, gold firming up, DXY rebounding, US$/Eur paring gains.
Implied vol slipping lower after directional gains w/higher Tsy ylds. Rates
receded as AG headers disputed, Rosenstein/Trump to meet Thu.

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