*** Tsys make new session lows......>

US TSYS SUMMARY: *** Tsys make new session lows into the close, extending bottom

of range several times after newly upsized $24B 10Y note auction that tailed

.8bp. Waves of selling after Bipartisan budget deal passes Senate with military

and domestic spending compromises. Rather muted trade on sell-off, however,

despite heavy volume (TYH>1.9M), OTC vol actually weaker despite late drive

higher in Tsy ylds.

- Sources reporting light/sporadic buying on the way down, not short covering

another added; Rebound in US$ (DXY +.688, 90.273) added to sell pressure.

Sporadic curve flattener unwinds in second half, prop and fast$ selling, real$

selling in long end late.

- Heavy selling in front end Eurodollar futures (EDH8-EDM8>900k) as rate hike

probability marched higher after halving the amount anticipated for year in

first half of week. Mar chances back to 86.6%, June at 55.3% according to MNI

PINCH model. Ongoing heavy option volume, 2-way put flow w/better buying/rate

hike insurance

- Late ylds: 2Y 2.130%, 3Y 2.326%, 5Y 2.563%, 7Y 2.743%, 10Y 2.843%, 30Y 3.117%