Tsys stuck to a tight range on Weds,...>

US TSY/RECAP: Tsys stuck to a tight range on Weds, with the curve edging flatter

as soft U.S. PPI data added support. There was a brief bout of excitement on WSJ

headlines that the U.S. is proposing a new round of trade talks w/China, but the

risk on flows were unwound not long after. A strong 10-Year Note auction drew

additional support, as the auction stopped through by 0.5bp, with the cover

ratio edging higher and dealer takedown easing.

- Dovish remarks from Fed's Bullard resulted in little fresh information, while

Fed's Brainard noted that further gradual hikes are likely to be appropriate,

with above neutral rates likely to be warranted.

- On the flow side prop & fast-money buyers were active early on, with

algo/program a/c sellers late morning. Decent corporate-supply hedging was noted

for a third consecutive session.  It was a heavy volume session for the short

end, with heavy sales in EDZ9, while buyers were noted in EDZ8 & EDM9. In Fed

Funds heavy buying was observed in FFF9, before a late 100K seller in FFV8.

- U.S. CPI, Fed's Bostic & 30-Year supply headline Thursday.

- T-Notes last 119.14, U.S. 10-Year cash tsy yields closed at 2.963%.