Tsys recover late after dropping.......>

US TSY/RECAP: Tsys recover late after dropping following news from China that

they were considering reducing UST purchases, more a function of evaporating

offers than heavy buy interest though latter at play covering shorts and taking

profits on tactical steepeners set earlier in week. Curves finish flatter after

trading broadly steeper in first half:2s10s -0.921, 57.158 (62.336H/57.117L),

5s30s -0.127, 56.152 (59.513H/55.775L). 

- Futures had quietly drifted to top end intra-day range heading into $20B 10Y

note re-open, traded higher after strong/stopped through w/2.579% rate (highest

since mid-2014), strong bid/cover of 2.69. - Little react to Chicago Fed Evans,

Dallas Fed Kaplan comments, Tsys held lower/narrow channel after sharp sell-off

during London hours on headline that China may slow/halt Tsy buying. US$

slammed, equities knocked lower but rebounded (emini -4.25, 2748.0), gold

firmer/off highs (XAU +5.54 1118.32), oil stronger (WTI +0.45, 63.41). 

- Flow includes real$ selling old 3Y to buy new, fast$ selling old 10Y to buy

new, heavy deal-tied flow/hedge unwinds late.

- T-Notes open Asia down 1 tick at 122.31, 10-Year yield last 2.557%.