Tsys trade weaker across the board,....>

US TSY FLOWS: Tsys trade weaker across the board, bouncing off late overnight

lows for the second time in last couple hours, largely mirroring EGBs. Equities

weaker, US$ softer/off highs, US$/EUR firmer/off lows. 

- Decent Tsy futures volume -- heavy option flow, particularly in TYZ expiry,

bearish flow w/strong buying in 116.5, 117 and 118 puts, large seller 118.5

calls, Block buy 15k TYX 118 puts early O/N.

- Pre-auction short sets ahead $36B 3Y auction (9128285F3) at 1130ET and $23B

10Y auction (9128284V9) at 1300ET

- Data on tap: September Final Demand PPI (0.2%) and August wholesale

inventories (0.8%). On PPI, Morgan Stanley economists "look for a 0.19%M gain,

marking a rebound after the decline in August which had been the first in over a

year." Nomura economists on wholesale inventories estimate a "solid 0.8% m-o-m

gain in

August's wholesale inventories led by both durable and nondurable goods."

- Tsy cash/ylds: 2Y 99-23 (2.894%), 5Y 99-03.25 (3.069%), 10Y 97-02.5 (3.222%),

30Y 92-26 (3.383%).