Tsys trade firmer, near middle.........>

US TSY FLOWS: Tsys trade firmer, near middle overnight range after extending

highs early in London hours as they trailed Gilts -- largely tied to Italy

budget concerns (BTPs vs. Bunds widening back out, peripherals in tow), Bunds

pared on back of strong data. Wires report Italy cabinet to meet around 1400ET

to hammer out fiscal targets.

- Rather decent Tsy volume so far (TYZ>430k), curves flatter, decent short end

selling post 3M LIBOR set +0.0099 to 2.3960% (+0.0234/wk), foreign real$ selling

short end, bank portfolio and real$ buying 5s, domestic real$ buying 10s,

ongoing/sporadic month end ext buying, fast$ and prop acct sales as rates

trimmed gains over last 3-4 hours, rate paying 2s and 5s.

- Lot of domestic data to absorb today, final leg Tsy supply w/$31B 7Y note

auction. Political headline distractions from DC: SCOTUS hopeful Kavanaugh

accuser hearing, appt vote still on for tomorrow (?) shouldn't have any market

react. Note, China out next week for National Day holidays will dampen volume a

little.