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Tsys trade softer w/equities firmer....>

US TSY FLOWS
US TSY FLOWS: Tsys trade softer w/equities firmer (and positive noise re:
China/US trade overnight; Canada bail hearing for Huawei exec resumes today,
however). Futures near low end overnight range on moderate volume (TYH>360k),
yld curves mostly flatter again. Salient data for Tuesday (estimates): Nov Final
Demand PPI (0.6% prior, -0.1% estimate), Fed in blackout through Dec 20; $38B 3Y
note auction (9128285R7).
- US Swap spds recovering slightly after gapping tighter late Mon (2Y down to
June 2016 lvls (-3.12 to 12.12). Appears short term funding pressure for banks
being felt earlier than normal headed into year end (though 1M LIBOR higher
again today +0.0118 to 2.4323% (+0.0321/wk). Some speculated compression
exacerbated by forced unwinds/deleveraging from Risk-Parity accts.
- Note, sovereign spds mildly mixed; GBP/US$ bounce off 18M lows (currently
+.00526 at 1.2617).
- Overnight flow includes pre-auction short sets', spec selling intermediates,
fast$ rate paying 5s. Tsy cash/ylds: 2Y 99-32 (2.752%), 5Y 100-19 (2.744%), 10Y
102-01.5 (2.884%), 30Y 104-13.5 (3.145%).

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