US TSYS: FEDS POWELL: NEED GRADUAL HIKES TO BALANCE INFL RISKS

US TSY SUMMARY: US TSYS SUMMARY: Tsy trading mildly higher into the bell, near

the top of the range with strong volume (TYZ 1.52M), curves flattening. Light

data today led by vehicle sales, Redbook retail sales, and ISM-NY current

conditions; Tsy largely ignored all of it as they moved in a tight range today; 

-Comments from Italy's Di Maio today led to 10Y note to hit highs; Headlines

included; "*DI MAIO: UNELECTED EU COMMISSION PRETENDS TO LECTURE ITALY GOVT-bbg"

and "*DI MAIO: WE WILL GO AHEAD W/BUDGET PLAN DESPITE THREATS-bbg"             

-Feds Powell spoke today stating "NEED GRADUAL HIKES TO BALANCE INFL RISKS" and

"SEE BOTH UPSIDE, DOWNSIDE INFL RISKS"                                          

-US$ higher DXY +.166, 95.464 (95.263L/95.744H), $/Eur lower -0.0027 at 1.1551,

$/Yen down -.32 113.61; equities slightly lower (emini -1.50, 2928.50 vs.

2936.00H); Gold strengthened (XAU +13.99, 1203.02); Oil fell (WTI -0.17, 75.13).

-Tsy cash/ylds: 2Y 99-28.25 (2.807%), 5Y 99-22.25 (2.939%), 10Y 98-16 (3.050%),

30Y 96-04.5(3.201%).                       

US TSY FUTURES CLOSE: Trading mildly higher near the top of the range, strong

volume (TYZ 1.46M), curves flattening; update:

* 2s10s -1.953, 24.113 (23.334L/25.847H);

* 2s30s -1.816, 39.322 (38.401L/41.408H);

* 5s30s -0.824, 26.131 (25.784L/27.987H);

Current futures levels:

* Dec Ultra bonds up 23/32 at 154-05 (153-07L/154-13H)

* Dec 30-yr Bond futures up 18/32 at 140-17 (139-27L/140-23H)

* Dec 10-yr futures up 5.5/32 at 118-27 (118-19.5L/118-29.5H)

* Dec 5-yr futures up 2.5/32 at 112-16.75 (112-13.25L/112-19H)

* Dec 2-yr futures up 0.5/32 at 105-12 (105-11L/105-13.25H)

US EURODOLLAR FUTURES CLOSE: Trading steady to slightly higher across the strip

with a parallel shift across greens through golds, strong volume. Current White

pack (Dec'18-Sep'19):

* Dec'18 +0.000 at 97.345

* Mar'19 +0.010 at 97.155

* Jun'19 +0.010 at 97.005

* Sep'19 +0.015 at 96.925

* Red pack (Dec'19-Sep'20) +0.025-0.015

* Green pack (Dec'20-Sep'21) +0.030-0.025

* Blue pack (Dec'21-Sep'21) +0.030-0.025

* Gold pack (Dec'22-Sep'22) +0.030-0.02

US DOLLAR LIBOR: Latest settles,

* O/N +0.0066 to 2.1773% (+0.0060 wk)

* 1 Month +0.0088 to 2.2739% (+0.0134 wk)

* 3 Month +0.0094 to 2.4075% (+0.0092 wk)

* 6 Month +0.0007 to 2.6070% (+0.0031 wk)

* 1 Year -0.0007 to 2.9248% (+0.0062 wk)

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

* Secured Overnight Financing Rate (SOFR): 2.22% vs. 2.25% prior, $917B

* Broad General Collateral Rate (BGCR): 2.20% vs. 2.24% prior, $416B

* Tri-Party General Collateral Rate (TGCR): 2.20% vs. 2.24% prior, $395B

US SWAPS: Latest spd levels:

* 2Y -0.26/16.81

* 5Y -0.21/11.68

* 10Y +0.24/5.49

* 30Y +0.23/-7.78

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

- Oct 03 Clev Fed Pres Mester, Comm Bnkng 21st Cent/research & policy conf, StL

- Oct 03 Fed VC for Supervision Quarles, Comm Banking in 21st Cent Conf, StL

- Oct 03 Chi Fed Pres Evans, OMFIF Lecture/U.S. Eco Outlook, London, Q&A 0630ET

- Oct 03 28-Sep MBA Mortgage Applications 0700ET

- Oct 03 Sep ADP private payrolls (163k, 185k) 0815ET

- Oct 03 Sep Markit Services Index (final) 0945ET

- Oct 03 Sep ISM Non-manufacturing Index (58.5, 58.0) 1000ET

- Oct 03 Oct help-wanted online ratio 1000ET

- Oct 03 28-Sep crude oil stocks ex. SPR w/w 1030ET

- Oct 03 Phi Fed Pres Harker, "Reinventing Our Communities: Investing in

Opportunity" Conf, Baltimore, MD. 1200ET

     TECHNICALS: 

Eurodollar/Treasury Option Summary

Eurodollar options, Pit/screen:

* +10,000 Red Dec 63/66/68 put tree at 7

* -5,000 Long Green Dec 68 Straddle at 74

* +5,000 Long Green Dec 55 puts at 3.5 vs 9680.5/0.10%

* 5,000 Short Nov 70/71/72 call fly at 1 vs 9689/0.05%

* 5,000 Long Green Dec 50/55 put sprd at 2

* Total 35,000 Mar 75/77 call sprd at 1 vs 17.5/0.05%, on screen

* 45,000 Short Mar 63/66 put sprd at 4.5 vs 9685.5/0.17%, Note: yesterday we saw

+80k at 5 vs 9682.5/0.20%

* 5,000 Short Nov 66/67 put sprd at 1.5 vs 9687.5/0.15%

* 15,000 Short Dec 67 puts at 4 vs 9685/0.10%

* 7,000 Blue Dec 63/65/72/73 Call Condor at 11

* 10,000 Short Oct 68/70 put sprd at 10 vs 9686.5/0.20%

* 40,000 Sep 63/65 put sprd at 1.5 vs 9691/0.05%

* 10,000 Green Dec 66/67 2x1 put sprd at 1 vs 9683/0.10%

     US TSY OPTIONS

US TSY OPTIONS: Latest trade,

* -1,000 FVZ 112.5 Straddle at 45, note +2,500 bought at 46 yesterday

* +1,000 TYZ 120 calls at 13 vs 28/0.10%

* +2,000 TYX 119.75 calls at 6 vs 24.5/0.18%

* Total +2,000 TYZ 120 calls at 13 vs 26/0.22%, all day

* +5,000 TYZ 119.5/121 call sprd 1x2 at 10

* +2,000 TYX 120 calls at 5

--MNI Chicago Bureau; +1 630-698-0154; email: ryan.martin@marketnews.com

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