Tsys make new session lows into the....>

US TSY/RECAP: 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

- T-Notes up %+ ticks at 121.05+ in Asia, 10-Year yield last 2.836%