Tuesday saw a generally risk-off theme......>

US TSYS: Tuesday saw a generally risk-off theme prevail, with worries over the

global economy & Sino-U.S. ties underlining demand for Tsys after the elongated

holiday weekend.

- Tsys surged to new session highs early in second half of the U.S. session

after FT headline noted "U.S. turns down China offer of preparatory trade

talks." The article focused on prep talks due this week ahead of top Chinese

trade envoy Liu He's visit to Washington next week, which will go ahead. The

headline weighed on risk assets before White House econ advisor Kudlow played

down the report, although he did allude to several sticking points in the talks.

- Curve saw the belly outperform with Tsys finishing off of best levels on the

Kudlow headlines.

- Dec existing home sales came in soft.

- T-Notes last 121.16, U.S. 10-Year cash Tsy yields closed at 2.739%.