US TSYS: EARLY TARIFF DELAY CHATTER VS. KUDLOW: STILL ON TABLE

US TSY SUMMARY: Mildly weaker by the close, reversing early support on US/China

trade headlines (U.S., CHINESE NEGOTIATORS PLANNING FOR DELAY OF DEC TARIFFS:

DJ) spurred unwinds in Tsys as equities blip higher. No deal is certain: KUDLOW

SAYS THE REALITY IS DEC. 15 TARIFFS `STILL ON THE TABLE', Bbg. 

- ON USMCA trade deal, democrats hoped for vote next week -- but McConnell says

Senate will not take up USMCA vote until 2020.

- Two way-session flow, position squaring ahead Wed's FOMC policy annc, no

change expected. Eurodollar futures 5,000 EDH0 1yr bundles (EDH0-EDZ0), -0.020.

- Second consecutive auction right on the screws US Tsy $24B 10Y note auction

(912828YS3) awarded 1.842% rate (1.809% last month) vs. 1.842% WI; 2.43

bid/cover (2.49 previous). 

- Swap spds reversed early widening, grinding to session narrows over last hour

as two-way flow in intermediates turn better receivers, spilling over to short

end, some position squaring ahead Wed's FOMC policy annc, light deal-tied flow

in 3s. The 2-Yr yield is up 3.9bps at 1.6517%, 5-Yr is up 2.5bps at 1.6809%,

10-Yr is up 1.6bps at 1.8346%, and 30-Yr is up 0.5bps at 2.2596%.

TECHNICALS

US 10YR FUTURE TECHS: (H0) Correcting

*RES 4: 130-17+ High Nov 1 

*RES 3: 130-16   61.8% of the Oct 7 - Nov 7 decline

*RES 2: 130-04+ High Dec 3 and bull trigger

*RES 1: 129-14+ High Dec 6

*PRICE: 128-27 @ 16:13 GMT, Dec 10

*SUP 1: 128-21   Low Dec 6

*SUP 2: 128-14+ 76.4% retracement of the Nov 7 to Dec 3 rally

*SUP 3: 128-11+ Low Nov 13

*SUP 4: 128-03+ Low Nov 12

10yr futures are broadly flat Tuesday.  A bearish focus however remains in place

following the sell-off that unfolded off the Dec 4 high last week resulting in a

low print of 128-21 on Friday. This marked a break of former support at 128-23+,

Dec 2 low and essentially negates the bullish implications of the bounce between

Dec 2 and Dec 3. This break lower has exposed 128-14+ next, 76.4% retracement of

the Nov 7 to Dec 3 rally. Resistance is at 129-14+, Friday's high.

AUSSIE 3-YR TECHS: (Z9) Plays the Range

*RES 4: 99.472 - 123.6% Projection

*RES 3: 99.460 - Alltime High Oct 7 

*RES 2: 99.404 - 3.0% Upper Bollinger Band

*RES 1: 99.395 - High Nov 27

*PRICE: 99.285 @ 16:13 GMT Dec 10

*SUP 1: 99.165 - Low Nov 13

*SUP 2: 99.130 - Low Nov 12

*SUP 3: 99.070 - Low Nov 8 and key support

*SUP 4: 99.055 - 1.00 projection of Oct 8 - Oct 22 decline from Oct 25 high

After a drubbing early last week, Aussie 3-year bonds have played the range,

providing few fresh technical signals. Focus remains on the recent lows as the

recent run-up to 99.395 now looks to be over. Prices continue to trade either

side of the 99.30 level at present, denting the outlook materially. 99.165 seen

as the next key support.

AUSSIE 10-YR TECHS: (Z9) Looking More Stable

*RES 3: 99.0358 - 76.4% retracement of the Oct 8 - Nov 11 decline

*RES 2: 99.0150/98.9994 - High Nov 28 / 2.0% Upper Bollinger Band

*RES 1: 98.9700 - High Dec 5

*PRICE: 98.8650 @ 16:17 GMT, Dec 10

*SUP 1: 98.7679 - Former channel resistance 

*SUP 2: 98.6850 - Low Nov 13

*SUP 3: 98.6500 - Low Nov 8 and primary support

Aussie 10yr futures bounced well mid last week after early weakness, which

largely held throughout the Wednesday/Thursday sessions. This has given bears

some pause for thought as prices look slightly more stable. It still looks too

soon to call for an extension of the recent recovery. Nonetheless, prices show

little sign of retreating much further with former channel

resistance-turned-support at 98.7679 holding for now. Momentum will be needed

before the outlook turns convincingly positive, with bulls needing to reclaim

99.0150.

JGB TECHS: (Z9): Strikes a New Contract Low

*RES 3: 154.31 - 1.0% 10-dma envelope

*RES 2: 153.93 - High Nov 6

*RES 1: 153.64 - High Nov 21

*PRICE: 152.36 @ 16:25 GMT, Dec 10

*SUP 1: 152.18 - 2.0% Lower Bollinger Band

*SUP 2: 151.86 - Contract Lows

*SUP 3: 151.37 - 1.0% 10-dma envelope

Downside pressure picked up Tuesday, pressuring JGBs to new contract lows of

151.86. The relevance of these levels for the Dec (Z9) contract can be called

into question, however, with focus now on the roll completion headed into the

new year. For bulls to regain any composure, markets must top the Nov 6 high at

153.93.

TSY FUTURES CLOSE: Mildly weaker for the most part, grinding off midmorning lows

through the second half on moderate volume (TYH>1.3M), yld curves flatter but

off early lows. Update:

* 3M10Y  -0.096, 27.734 (L: 23.921 / H: 28.602)

* 2Y10Y  -1.927, 18.268 (L: 17.718 / H: 20.743)

* 2Y30Y  -3.025, 60.729 (L: 59.665 / H: 64.113)

* 5Y30Y  -2.014, 57.676 (L: 56.943 / H: 59.986)

Current futures levels:

* Mar 2-Yr futures down 1.75/32 at 107-20.875 (L: 107-20.75 / H: 107-24.375)

* Mar 5-Yr futures down 2.5/32 at 118-19.25 (L: 118-18 / H: 118-26.75)

* Mar 10-Yr futures down 2.5/32 at 128-28.5 (L: 128-25.5 / H: 129-07)

* Mar 30-Yr futures down 1/32 at 157-30 (L: 157-19 / H: 158-17)

* Mar Ultra futures up 3/32 at 185-21 (L: 185-04 / H: 186-23)

US EURODLR FUTURES CLOSE: After a stronger open, Whites through Blues trade

weaker after the bell, near session lows, Golds steady. Current White pack (Dec

19-Sep 20):

* Dec 19 -0.010 at 98.105

* Mar 20 -0.015 at 98.280

* Jun 20 -0.020 at 98.360

* Sep 20 -0.025 at 98.415

* Red Pack (Dec 20-Sep 21) -0.03 to -0.015

* Green Pack (Dec 21-Sep 22) -0.015 to -0.005

* Blue Pack (Dec 22-Sep 23) -0.005 to steady

* Gold Pack (Dec 23-Sep 24) steady to +0.005

US SWAPS: Spds reversed early widening, grinding to session narrows over last

hour as two-way flow in intermediates turn better receivers, spilling over to

short end, some position squaring ahead Wed's FOMC policy annc, light deal-tied

flow in 3s. Current levels:

Time (ET)   2Y Swap/Mid    5Y Swap/Mid   10Y Swap/Mid   30Y Swap/Mid

Tue 1500    -0.94/+0.50    -0.50/-3.25   -0.50/-7.25    +0.12/-32.62

1315        -1.25/+0.19    -0.69/-3.44   -0.69/-7.44    -0.12/-32.88

1200        -0.44/+1.00    -0.25/-3.00   -0.25/-7.00    +0.50/-32.25

0930        -0.38/+1.06    +0.19/-2.56   -0.06/-6.81    +0.38/-32.38

Tue Open    +0.44/+1.88    +0.25/-2.50   +0.12/-6.62    +0.50/-32.25

US DOLLAR LIBOR: Latest settles

* O/N -0.0076 at 1.5290% (-0.0001/wk)

* 1 Month +0.0180 to 1.7356% (+0.0205/wk)

* 3 Month -0.0011 to 1.8873% (-0.0032/wk)

* 6 Month -0.0015 to 1.8786% (-0.0081/wk)

* 1 Year -0.0024 to 1.9329% (+0.0097/wk)

STIR: Federal Reserve Bank of New York EFFR for prior session:

* Daily Effective Fed Funds Rate: 1.55%, volume: $76B

* Daily Overnight Bank Funding Rate: 1.55%, volume: $160B

US TSYS: REPO REFERENCE RATES: (rate, volume), 

* Secured Overnight Financing Rate (SOFR): 1.56%, $1.042T

* Broad General Collateral Rate (BGCR): 1.53%, $413B

* Tri-Party General Collateral Rate (TGCR): 1.53%, $388B

OUTLOOK: *** US Data/speaker calendar (prior, estimate):

11-Dec 0700 06-Dec MBA Mortgage Applications (-9.2%, --)

11-Dec 0830 Nov CPI (0.4%, 0.2%); Ex Food & Energy (0.2%, 0.2%)

11-Dec 1000 Q3 Service Revenue (1.3%, --)

11-Dec 1000 Dec Atlanta Fed inflation (2.0%, --)

11-Dec 1030 06-Dec crude oil stocks ex. SPR w/w

11 Dec 1300 US Tsy $16B 30Y Bond (912810SK5) auction

11-Dec 1400 Nov Tsy budget balance (-$134.5B, -$206.2B)

11-Dec 1400 FOMC policy announcement

11-Dec 1430 Fed Chair Powell conference

PIPELINE: Issuance winding down for the year

Date $MM Issuer/Rating/Desc/Maturity/Yld; Priced *; Launch #:

12/10 $1.25B #CIBC +3Y FRN SOFR +80

Eurodollar/Tsy options: 

Eurodollar Options

* +5,000 Feb 83/85/86 call flys, 1.0

* -5,000 short Jan 87/90 call spds, 1.0 vs. 98.46/0.05

* +4,000 Jun/Sep 88 3x2 call strip, 17.0

* +10,000 Jun 90/92 call spds, 1.0 vs. 98.37/0.10%

* +5,000 Feb 85/short Feb 90 call spds, 0.0 +EDG

Block, 1132:01ET

* 10,000 Sep 87/90 call spds vs. Sep 81 puts, 0.0 net

* +4,000 short Feb/short Mar 87 call spds, 1.5

* 2,500 short Feb 82/83/85 put trees, 3.5

* 2,500 short Jun 80/81/82 put trees, 0.5

* 1,250 short Feb 83/85 2x1 put spds, 0.0

* 2,500 short Mar 81/82 2x1 put spds, 0.0

* 2,500 short Apr 80/81 2x1 put spds, 0.5

* +10,000 Mar 82/83/85 call flys, 1.75 in pieces

* +2,500 Jun 85/90/95 call flys on screen, 5.0

* +10,000 Blue Dec 85/87 call spds, 1.0 vs. 98.37/0.12%

* +5,000 Feb 85/90 call spds, 1.0

* +10,000 Jun 90/91 call spds, 0.5

* +5,000 short Jun 88/93 call spds, 4.5

* +1,000 Sep 86/88/91 1x3x2 call flys, 0.5 net

* +2,000 Red Dec'20 81 puts, .75

* +5,000 Sep 88/93 call spds, 4.5

* 2,500 Feb/Mar 87 call spds, 1.5

* 1,500 Mar 80/81/83 broken put flys, 11.5

* 2,000 Sep 87/90/92 call flys, 2.0 vs. 98.46/0.10%

* +2,000 Red Dec'20 90 calls, 7.0 vs. 98.435

* +45,000 (10k Blockd) Jan 81 puts, cab

* -1,500 Mar 82/83 straddle strips, 26.0

Recap overnight trade, Blocks

* 29,000 (20k Blocked, 9k at 2.0) Sep 88 calls 1.5-2.0 over Sep 81/82 put spds

vs. 98.45/0.28%

* Block +5,000 Mar 88 calls, 0.75 vs. 98.32/0.05%

* 2,500 Sep 96 calls, cab

* 2,000 Jan 86/87 call spds

* 1,500 Feb 83/85 1x2 call spds

* hear paper sizing up the Sep 83/85 straddle strip bid after selling at

66.0-65.5 yesterday

Tsy options:

* just over -20,000 FVF 118.25/118.75 put spds, 15/64

* +40,000 TYF/TYG 130 call spds, 16/64

* 3,000 USF 161.5/162 call spds, 1/64

* 2,000 FVG 119.75 calls, 9.5/64

* 1,000 TYF 128 puts, 6/64 vs. 1,900 TYF 129 puts, 30/64 vs. 129-01

* 1,000 TUF 107.3/107.5 put spds, 1/64

* paper offering the TYG 127/131 strangle at 25/64

Recap screen trade by the bell

* +15,000 TYF 130.75 calls, 6- to 7/64

* +2,000 TYF  126.5/127.5/128.5 put flys, 10/64

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

[TOPICS: MTABLE,M$U$$$,M$$FI$,MN$FI$,MN$FX$]