US TSYS: FOMC HOLDS STEADY, REMAINS PATIENT, MUTED INFLATION

US TSY SUMMARY: Tsys trading higher late, well off initial knee jerk sell-off in

long end post FOMC. Yld curves broadly steeper but scaling back w/long end

paring losses. Focus turns to Fri's jobs report

- Equities strong but off highs (SPX +41.0, 2681.25 vs. 2689.75H); US$ index

lower (DXY -.376, 95.455).

- Addition of 'patient' is right on the money in terms of sell-side

anticipation, given how often that word

came up in the previews. Expect Powell to use that word in the presser as well.

- Fitch chief economist Brian Coulton observation: "Fed statement reads more

like a pause than end of the hiking cycle."

- Flow includes heavy front end buying, steepener blocks; long end comes under

renewed pressure from props, fast- and real$; Fast$ dip buyers on lows in long

end evaporate, better buyers on net in front end.

- Tsy cash/ylds: 2Y 99-31.25 (2.508%), 5Y 100-01.75 (2.485%), 10Y 103-25

(2.681%), 30Y 106-18 (3.038%).

MONTH-END EXTENSIONS: *** UPDATED Bloomberg-Barclays US month-end index

extension/forecast summary compared to the average increase for the past year

and the same time in 2018; TIPS 0.11Y; Govt inflation-linked, 0.14Y

*.....................Projected...1Y Avg Incr..Last Jan

*US Tsys.................0.06........0.08........0.07

*Agencies................0.07........0.10........0.05

*Credit..................0.12........0.09........0.08

*Govt/Credit.............0.08........0.08........0.07

*MBS.....................0.04........0.07........0.07

*Aggregate...............0.07........0.08........0.07

*Long Govt/Credit........0.07........0.09........0.07

*Interm Credit...........0.09........0.08........0.08

*Interm Govt.............0.06........0.08........0.06

*Interm Govt/Cred........0.07........0.08........0.08

*High Yield..............0.02........0.08........0.10

US TSY FUTURES CLOSE: Mostly higher, long end well off post FOMC lows, curves

still broadly steeper, update:

* 2s10s +3.489, 17.008 (13.451L/18.172H);

* 2s30s +6.107, 52.645 (45.931L/54.760H);

* 5s30s +5.648, 54.960 (48.276L/56.604H);

Current futures levels:

* Mar Ultra bonds down 4/32 at 160-01 (159-08L/160-07H)

* Mar 30-yr Bond futures up 5/32 at 145-26 (145-06L/145-29H)

* Mar 10-yr futures up 8/32 at 122-01 (121-16L/122-04.5H)

* Mar 5-yr futures up 7.25/32 at 114-19.5 (114-08L/114-22.25H)

* Mar 2-yr futures up 2.75/32 at 106-01.75 (105-29.5L/106-03H)

US EURODLR FUTURES CLOSE: Moderately higher, off post FOMC highs, Reds

outperform. Current White pack (Mar'19-Dec'19):

* Mar'19 +0.015 at 97.340

* Jun'19 +0.040 at 97.335

* Sep'19 +0.045 at 97.330

* Dec'19 +0.050 at 97.320

* Red pack (Mar'19-Dec'20) +0.060-0.065

* Green pack (Mar'20-Dec'21) +0.060-0.040

* Blue pack (Mar'21-Dec'21) +0.040-0.030

* Gold pack (Mar'22-Dec'22) +0.030-0.020

US DOLLAR LIBOR: Latest settles,

* O/N -0.0005 to 2.3839% (-0.0008/wk)

* 1 Month +0.0103 to 2.9091% (+0.0091/wk)

* 3 Month -0.0082 to 2.7362% (-0.0154/wk)

* 6 Month -0.0119 to 2.8115% (-0.0207/wk)

* 1 Year -0.0031 to 3.0206% (-0.0109/wk)

US SWAPS: Spds steady/mixed by the bell, spd curve flatter vs. bull steepening

in Tsys as short end extending move late, long end extends inversion. Front end

leads move after decent paying in 2s last hour >$1B nominal around 2.722-2.727%.

Recent mixed fly crosses include 3s5s8s payer and 2s3s10s receiver. Latest spd

levels:

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

Wed 3:00    +1.38/14.38   +1.12/9.38     +0.00/3.00    -1.12/-19.75

12:15       +0.88/13.88   -0.12/8.12     +0.00/3.00    +0.69/-17.94

10:15       +0.75/13.75   -0.06/8.19     +0.12/3.12    +0.81/-17.81

9:00        +0.50/13.50   -0.12/8.12     -0.12/2.88    +0.44/-18.19

Wed Open    +0.50/13.50   -0.31/7.94     -0.19/2.81    +0.50/-18.12

Tue 3:00    -0.25/13.62   +0.31/8.12     +0.25/2.94    -0.56/-18.69

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

* Secured Overnight Financing Rate (SOFR): 2.40%, $934B

* Broad General Collateral Rate (BGCR): 2.37%, $457B

* Tri-Party General Collateral Rate (TGCR): 2.37%, $438B

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

31-Jan 0730 Dec challenger layoff plans (35.3%, --)

31-Jan 0830 26-Jan jobless claims (199k, 218k)

31-Jan 0830 Q4 ECI (0.8%, 0.8%)

31-Jan 0900 Jan ISM-Milwaukee Mfg Index (52.87, --)

31-Jan 0945 Jan MNI Chicago PMI (65.4, 60.8)

31-Jan 1030 25-Jan natural gas stocks w/w

31-Jan 1630 30-Jan Fed weekly securities holdings

PIPELINE: Corp issuance on hold ahead FOMC, $3.65B priced Tue, $14.75/wk 

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

No new corporate, supra-sovereign issuance on tap Wed

-

1/29 $1B *Crown Castle $600M 10Y +165, $400M 30Y +215

1/29 $1.25B *Kommunalbanken 5Y MS+15

1/29 $800M *New York Life Global $400M 2Y +42, $400M 2Y FRN L+28

1/29 $600M *Jackson National Life 3Y +78

1/28 $1B Colfax $500M 5NC2, $500M 7NC3 -- this week sometime

Eurodollar/Treasury Option Summary 

Eurodollar options, Pit/screen:

Block, 1454:51ET,

* 10,000 Sep 70/72 put spds, 5.5 vs. 97.31/0.25%

* -12,500 short Feb/Green Feb 71/72 put spd strip 1.5

* +5,000 Sep 70/71/73 call trees, 2.5

* +5,000 Sep 75 calls at even vs. Sep 71/72 put spds

* +40,000 Dec 71/72/73 call flys, 2.25

* -5,000 Dec 67/70/71 broken put flys, 0.0

* +40,000 Sep 71/72/73/75 call condors, 5.5

* +10,000 Jun 71/72/73/75 call condors, 8.0

* +5,000 Green Mar 75 straddles, 47.5

Large vol spd, 11.0 net cr

* +25,000 Jun 71/73 strangles, 5.0 vs.

* -12,500 Sep 71/73 strangles, 9.0 and

* -12,500 Sep 71/75 strangles, 12.0

* +12,500 short Mar 70/71 2x1 put spds, 0.5 vs. 97.315/0.0.05%

* +10,000 Red Mar 85/90 call spds, 1.5

Flurry of vol buying out the curve

* +5,000 Blue Sep 73 straddles, 41.0

* +2,000 short Jun 73 straddles, 31.5

* +2,000 Sep/Dec 72 straddle spds, 10.0 net/Dec over

* 3,500 Dec 72/73 call spds, 4.5 w/

* 3,500 short Dec 76/77 call spds, 3.75/legged

* 1,900 Jun 72/short Jun 71 put spds, 1.0

* +5,000 short Mar/Green Mar 72 put spds on a 1x2 basis, 0.0 net

* +8,000 short Jul 71/72/73 call trees, 2.0 earlier

* +10,000 Jul 71/72/73 call trees on screen earlier

block, 0732ET

* +5,000 short Mar 71/72 put spreads, 3.0

Tsy options, Pit/screen:

* +5,000 wk3 TY 122/123 call spds, 11/64

* +10,000 TYH 120 puts, 3/64 -- Blocked at 0922:50

* +3,500 TYH 120/123 call over risk reversals, 1/64 net vs. 121-15.5/0.14%

* 2,000 wk1/wk2 TY 121 put strip, 6/64 vs. 4,000 wk3 TY 122 calls, 15/64

* Update, over 21,000 TYH 122.5 calls on screen from 11- down to 9/64

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

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