Tsys trading higher after the bell.....>

US TSY FLOWS: Tsys trading higher after the bell -- but well off early session

highs amid ongoing headline sensitivity rather than substantive economic data

ahead Wed's FOMC policy annc. 

- Rates surged well before NY open -- following EGBs lead on heels of EU Draghi

comments on potential stimulus,rate cuts if outlook doesn't improve. Tsy 10YY

slipped to 2.0148% low; Bund 10YY -0.07 at -.31, Swedish 10YY 0.0 for first

time. Curves bull flattening (choppy 3M10Y bounces off recent inverted low of

-18.565 to -15.209 late).

- Trump tweet criticizing Draghi comment drew little market react -- but Trump

tweet over "extended" meet w/China's Xi did the trick w/heavy program selling in

rates and heavy buying in equities. Fast- and some real$, prop and trading acct

bought at points on the way down, gamma hedgers squaring ahead Wed's FOMC still

no change expected, June cut chances gained early (Sep or Oct evenly distributed

around 80%, Dec appr 75%. Heavy option trade hedging lower ylds.

- The 2-Yr yield is down 0bps at 1.8684%, 5-Yr is down 2.2bps at 1.834%, 10-Yr

is down 3.6bps at 2.0578%, and 30-Yr is down 3.5bps at 2.548%.