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US Tsys have faded from session.....>

US TSYS SUMMARY
US TSYS SUMMARY: US Tsys have faded from session highs but still remain higher
on the day as there has been little to distract the markets from escalation in
US/China trade spat. The belly of the curve has experienced some slight
outperformance with 5s/30s 0.5bp steeper. 10-yr note last -4bp at 2.877% vs low
of 2.8511%.
- China has said it would retaliate firmly with "qualitative" & "quantitative"
measures if the United States publishes an additional list of tariffs on Chinese
goods.
- US Tsys jumped higher following the China announcement during Asian session
and then extended gains as European session got underway. While comments from
ECB Draghi that policy would be adjusted gradually after first rate hike
underpinned Bunds/Tsys.
- Eurodollar strip is higher/slightly flatter but well off session highs. Blue
contracts were 8.5 ticks higher at one point but are now 5 to 5.5 ticks higher.
- Swap spreads are wider led by 0.7bp move in the 2-yr while breakevens are
mixed/little changed.

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