Tsys were weaker by the bell,..........>

US TSY/RECAP: Tsys were weaker by the bell, although a large Block buyer of 20K

FVZ8 through the offer helped the complex off of lows late on. Yields edged

higher, with the belly experiencing some slight underperformance. Truth be told

it was a relatively quiet session ahead of the expected 25bp hike from the FOMC

tomorrow, while continued selling in the short end has pushed chances of an

additional Fed rate hike at year end above 90%.

- The latest 5-Year auction produced a 0.4bp tail, as the cover ratio eased and

sat a touch softer than the recent auction average, while dealer participation

edged higher, topping the recent auction average. It was a less than inspiring

auction, coming on the heels of a soft 2-Year auction Monday, with demand

suffering ahead of tomorrow's FOMC MonPol decision (where a hike is expected).

- While markets are pricing in tighter policy odds for year end & beyond, some

large option & futures plays are trading, hedging a less aggressive Fed by end

'19: large buying Eurodollar Dec'19 1yr mid-curve upside calls funded by large

selling downside puts; in futures: over +50k EDZ9 vs. EDZ0 at 0.045.

- T-Notes last 118.14+, U.S. 10-Year cash Tsy yields closed at 3.096%.