US TSYS: LATE WEAKNESS, TARIFF "CARVE-OUTS" FOR CANADA/MEXICO?

US TSY SUMMARY: Rates trade lower/equities manage rebound as political concerns

continue to unduly affect markets. Potential for tariff "carve-out" for Canada

and Mexico pushed Tsy ylds higher, equities bouncing after prior headlines that

US Pres Trump is expected to sign steel/aluminum tariffs by Friday. Tariffs

remained sore point for some, less than 24 hours after Gary Cohn Pres Trump's

econ advisor resigned over issue.

- US$ index lower (DXY -0.015, 89.603); equities firmer/welll off lows (emini

+2.25, 2726.25); gold weaker (XAU -10.19, 1324.46); crude weaker/off lows (WTI

-1.33, 61.27 -- sold off on headlines Exxon looks to rebuild output).

- Initial risk-off carry over after Cohn resignation, Tsys pared gains post

better than exp ADP gain of 235k, Jan up-rev'd to 244k from 243k.

- Choppy two-way trade/narrow range. Sources noted crude lead midday equity

sell-off, concern over technical break of 60.50, potentially spurring heavy

selling in equities. Tsys bounced on move, early risk-on tone has flipped to

risk-off. Late ylds: 2Y 2.254%, 3Y 2.419%, 5Y 2.649%, 7Y 2.809%, 10Y 2.883%, 30Y

3.153%

US TSY FUTURES: June 5- and 10Y futures that have been outperforming all day

pare move, trade steady/lower into the close. Reuters spamming "Breaking News"

headlines that Pres Trump to sign steel & aluminum tariff by end of week not

really new anymore. Reuters headline soon after adds: "WHITE HOUSE SAYS

POTENTIAL TARIFF EXEMPTIONS COULD EXTEND TO COUNTRIES OTHER THAN CANADA AND

MEXICO BASED ON NATIONAL SECURITY." Equities well off lows, as is gold. WTI

still under pressure. Latest curve update:

* 2s10s -0.768, 62.467 (62.730H/60.878L);

* 2s30s -0.487, 89.425 (89.971H/87.763L);

* 5s30s +0.423, 50.203 (51.204H/49.016L);

Current futures levels:

* Jun Ultra bonds down 15/32 at 155-08 (155-07L/156-15H)

* Jun 30-yr Bond futures down 10/32 at 143-02 (143-02L/144-00H)

* Jun 10-yr futures down .5/32 at 120-00.5 (120-00L/120-14.5H)

* Jun 5-yr futures down .5/32 at 113-31 (113-30.5L/114-08H)

* Jun 2-yr futures down .75/32 at 106-07.75 (106-07.5L/106-10.75H)

US EURODOLLAR FUTURES CLOSE: Mildly lower by the bell, at/near lows

w/Whites-Greens under pressure all day, narrow ranges on quiet trade. Current

White pack (Mar'18-Dec'18):

* Mar'18 -0.010 at 97.880

* Jun'18 -0.010 at 97.750

* Sep'18 -0.010 at 97.635

* Dec'18 -0.010 at 97.495

* Red pack (Mar'19-Dec'19) -0.015

* Green pack (Mar'20-Dec'20) -0.015-0.010

* Blue pack (Mar'21-Dec'21) -0.005

* Gold pack (Mar'22-Dec'22) -0.005-0.010

US DOLLAR LIBOR: Latest settles, 

* O/N -0.0006 to 1.4469 (-0.0006/wk)

* 1 Month +0.0096 to 1.7113% (+0.0208/wk)

* 3 Month +0.0124 to 2.0473% (+0.0221/wk)

* 6 Month +0.0112 to 2.2405% (+0.0121/wk)

US SWAPS: Wider across the curve by the bell, narrow range after modest two-way

flow, better paying in 5s and 10s fast$, small ($97k DV01) 4s5s flattener.

Latest spread levels:

* 2Y  +0.38/28.06

* 5Y  +0.38/11.62

* 10Y +0.56/2.19

* 30Y +0.62/-17.12

PIPELINE: $1.25B Swedish Export Credit 5Y Priced 

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

03/07 $1.25B *Swedish Export Credit 5Y +18

03/07 $800M #Hyundai Capital Am, $550m 3Y fix, $250M 3Y FRN

03/07 $500M Kommunalbanken FRN '21 Tap

03/07 $Benchmark Province of Alberta Canada 10Y

-

Potential upcoming issuance in the near term:

Chatter, United Overseas Bank (UOB)

Chatter, Korea Resources (KORESC)

Chatter, Aegon NV (AEGON)

OUTLOOK: - Mar 08 Feb challenger layoff plans (-2.8%, --) 0730ET 

- Mar 08 03-Mar jobless claims (210k, 220k) 0830ET 

- Mar 08 04-Mar Bloomberg comfort index 0945ET 

- Mar 08 Q4 Service Revenue (+2.4%, --) 1000ET 

- Mar 08 Q3 QCEW employment (+2.407m, --) 1000ET 

- Mar 08 02-Mar natural gas stocks w/w 1030ET 

- Mar 08 Q4 domestic non-financial debt 1200ET 

- Mar 08 07-Mar Fed weekly securities holdings 1630ET

Eurodollar/Treasury Option Summary

Eurodollar options, Pit/screen:

* +15,000 short Dec 67/70 put spds 1.0 over the short Dec 77 calls

* +5,000 Jun 77 puts, 6.5

* -7,500 Aug 73/75 put spds 0.75 over the Mar 78 puts

* +3,000 Dec 85 calls, 0.5

* -3,000 Green May/Green Jun 71 straddle strip, 60.0

* -3,000 Blue Jun 70 straddles, 34.0

* total -40,000 Green Jun 67/68 put spds, 2.5, 20k vs. 97.14/0.10%

Block posts, 1121:41-1123:37ET

* total +20,000 Red Jun19 71 puts, 14.5

* +10,000 Green Sep'20 63/65/67 put flys, 3.5 vs. 97.095/0.10%

* +3,000 short Mar 72/75 call over risk reversals, 1.5

* +20,000 Red Mar 71/73 put spds vs. 5,000 Jun 81 put, 2.5 net debit

* +7,500 Blue Apr 68/73 put over risk reversals vs. 97.06/0.36%

* +5,000 Red Dec'19 62 puts, 3.5 vs. 97.20/0.10%

* +2,500 Red Jun'19 63/66 and 67/70 put spds, 7.0 total

Block, 0854:02

* +15,000 long Green Sep'20 77/78 call strip, 34.5 vs. 97.11

* +16,000 short Jun 71/72/73 put trees, 1.0 vs. 97.285

* -5,000 short Jun 76 calls, 5.0 vs. 97.31

* +3,000 Sep 73/75 put spds, 2.5

Screen trade 

* 5,000 Dec 71/72 put spds, 2.0 (follows heavy buying since late last week) 

* 14,750 short Dec 67/68 put spds vs. 77 calls

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

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