Tsys trading mildly weaker/off lows....>

US TSY FLOWS: Tsys trading mildly weaker/off lows after decent $27B 10Y auction

(9128285M8), trades through/awarded 3.209% rate (3.225% in October; 3.111% avg)

vs. 3.218% WI; 2.54 bid/cover (2.39 previous).

- Rates opened mildly bid after Brexit headlines rattled mkts O/N, Gilts/EGBs

spiked on remark by DUP chief whip over no-deal Brexit, more positive tone from

Brexit Sec Raab (who says "thumbs up" anyway?) had rates scale back risk-off

support. BTP vs. Bunds wider, Italy recalcitrant over budget.

- Tsy support evaporated as equities opened bid, held gains into midday, but

support tenuous during Midterm elections. Otherwise, early two-way flow turned

better selling by prop, fast- and real$ in 5s-10s. Midterm election risk-event

buoys implied vol in at-the-money 5- and 10Y options read higher on the day.

Better put volume on net, calls more two-way. Tsy futures flattener Block:

-11,398 FVZ 112-05 vs. +2,103 WNZ 148-19; Large TYZ 117.5 put roll to TYF Block

ahead quarterly expiry in couple weeks.

- Tsy cash/ylds: 2Y 99-28.75 (2.924%), 5Y 99-06.5 (3.047%), 10Y 97-05.5

(3.212%), 30Y 92-00.5 (3.431%).