US TSYS RISE:SOFT STOCKS,TAX VIEW,FX-TIED BID,GERMAN BUND GAIN

     US TSYS SUMMARY: Treasuries gained Mon amid buying as stocks ebbed as

Bloomberg said House may have corporate tax cuts phased in over 5 yrs. Long end

aided late on relief as Tsy Sec Mnuchin said proposed cash Ultra long bond idea

did not draw much demand. 

- FX-tied buying in Tsys amid weaker US$/yen. Tsys had real$ and US/foreign

buyers in morning; 5-yr notes seen alluring when hit 2.0% yield mark. US govt

bonds had technical buyers as US 10-year note moved away from 2.40%. 

- Tsys aided as German Bunds rose on lower 1.5% pan-German flash HICP and big

Bund futrs block buys: 5,689 RXZ6 at 162.51 at 13:14 GMT; 5,074 RXZ7 at 162.61

at 13:14 GMT too. Tsy futrs block buy at 8:45am ET of 5,000 TYZ 10Y at 124-28,

buy-thru; Tsy futrs block sale at 8:24am ET: 8,000 FVZ 5Y at 117-04.25

sell-thru; also block buy of 4,565 TYZ 124-28 buy thru at 6:31am ET. 

- Eurodlr futures had 6:49am ET block buy of 10,000 EDH8/EDZ8 at 0.280, also

bought on screen; 10:39am ET Eurdlr futures sale of 5,000 EDM8/EDH9 strip. 

- Light month-end bid; decent options-tied buys. 

- Heavy high-grade US corporate bond issuance Mon. 

- TSYS 3PM ET: 2Y 1.580%; 3Y 1.701%; 5Y 1.998%; 7Y 2.219%; 10Y 2.372%; 30Y

2.882%

US TSY FUTURES CLOSE: Trading higher across the curve, near late session highs,

10Y yld down to 2.372%. Support from fx-tied bid on weaker US$ vs. Yen, knock on

support after spike higher in German Bund; corporate tax plan/5yr phase-in plan

weighed on equities/added bid in Tsys; light month end support and decent option

related buying. Current futures levels: 

* Dec Ultra bonds up 1-17/32 at 164-15 (163-04L/164-18H) 

* Dec 30-yr Bond futures up 1-4/32 at 152-10 (151-11L/152-13H) 

* Dec 10-yr futures up 13/32 at 125-00 (124-23L/125-01.5H) 

* Dec 5-yr futures up 6.75/32 at 117-07.75 (117-02.75L/117-08.75H) 

* Dec 2-yr futures up 1/32 at 107-22.5 (107-21.75L/107-23.25H)

US EURODLR FUTURES CLOSE: Trading at/near session highs by the bell, long end of

strip outperforming on moderate volume. Current White pack (Dec'17-Sep'18): 

* Dec'17 +0.010 at 98.495 

* Mar'18 +0.010 at 98.360 

* Jun'18 +0.015 at 98.250 

* Sep'18 +0.020 at 98.170 

* Red pack (Dec'18-Sep'19) +0.030-0.045 

* Green pack (Dec'19-Sep'20) +0.050-0.060 

* Blue pack (Dec'20-Sep'21) +0.060 

* Gold pack (Dec'21-Sep'22) +0.065-0.060

US SWAPS: Spds running modestly wider by the bell after running tighter through

the first half. light volume included front end flattener: 2s/5s spd curve

flattener (99.6k DVO1), drop in swappable supply adding to move wider with props

acct rate paying in 10s, real$ in 30s later in second half. OTC vol firmer but

off earlier highs at start of big data risk week (FOMC, BoE policy annc', PMI,

and NFP). Latest spread levels: 

* 2Y +0.25/22.75 

* 5Y +0.25/7.88 

* 10Y +0.44/-2.31 

* 30Y +0.75/-28.75

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

- Oct 31 Start of two-day FOMC policy meeting in Washington DC

- Oct 31 Q3 ECI (0.5%, 0.7%) 0830ET

- Oct 31 28-Oct Redbook retail sales m/m (-1.3%, --) 0855ET

- Oct 31 Oct ISM-Milwaukee Mfg Index (60.24, --) 0900ET

- Oct 31 Aug Case-Shiller Home Price Index (0.3%, --) 0900ET

- Oct 31 Oct MNI Chicago PMI (65.2, 62.0) 0945ET

- Oct 31 Q3 housing vacancies rate (1.5%, --) 1000ET

- Oct 31 Oct Conference Board confidence (119.8, 121.0) 1000ET

- Oct 31 Oct Dallas Fed services index (12.4, --) 1030ET

Eurodollar/Treasury option summary

Eurodollar options

Pit/screen:

* total -175,000 Red Dec'18 80/81 put spds, 6.0 vs. 98.07/0.12%. Looks to be a

partial closer upper legs of large Red Dec 76/78/80/81 put condor sale back in

mid-June, -115-125k on a 5x2x8x5 ratio, belly sold over from 8.5-9.5.

* -25,000 Green Dec 72/73 put spds, 0.5

* +3,000 Dec 86/87 call spds, 0.75

* +3,000 Jan/Feb 83 call spds, 1.25

* -5,000 Dec 85 puts, 3.25

* -5,000 short Dec 81 calls, 5.0

* +5,000 short Dec 81/Blue Dec 78 call spds, 0.5/steepener

* +4,000 Green Mar 73/76 2x1 put spds, 2.0

* +4,000 Green Feb/Green Mar 72/76 put spd strip, 11.0

* +5,000 Dec 80/81/83 call flys, 2.5

* +4,000 Green Dec 75/77 2x1 put spds, 3.5

* +3,000 Blue Dec 72/73/75 put trees, 1.0

* 5,000 short Jan 78/80 2x1 put spds, 1.0 vs. 98.04/0.10%

* 2,000 Blue Jun 76 straddles, 47.5

--------------------

* Update, total -48,000 Red Dec'18 80/81 put spds, 6.0 vs. 98.07/0.12%

* +5,000 short Dec 82 calls, 1.5 vs. 98.075

* 4,000 Blue Mar 73/76 2x1 put spds, 2.0 vs. 97.80

* +4,500 short Dec 80/81/83 broken call flys, 2.5 (adds to screen flow)

* 2,500 Dec 85/86/87 1x3x2 call flys, 0.5

* +5,000 Green Nov/Green Dec 76 put spds, 2.0/steepener

* +5,000 Green Nov 77 puts, 2.5

* -20,000 Red Sep'19 75 puts, 13.5

* -2,000 Jun 82/Sep 81 straddle strip, 51.0

* -10,000 Blue Nov 76 puts, 2.5

* 2,000 short Mar 82/Blue Mar 81 1x2 call spds, 4.0

* 2,000 short Dec 78 puts, 1.5

* +4,000 short Mar 82/Blue Mar 81 call spds, cab

* Block, -10,000 short Mar 78 puts, 6.5

* +38,000 short Dec 80/81/83 call flys, 2.0

* 3,000 short Nov 78/80 put spds

* 2,250 Green Nov 78 straddles

Tsy options

Pit/screen:

* -10,000 TYZ 126 calls, 10/64, screen

* 2,500 TYZ 125 calls, 32-33

* 2,500 wk2 FV 116.5 puts, 2.5/64 earlier

* +25,000 FVZ 114.25 puts, .5/64

* 1,000 TYZ 123/125 2x1 put spds, 30/64 vs. 124-27/0.32%

* 4,000 wk1 TY 124.7/125.2 call spds, 15/64 vs. 124-29

* -6,500 FVZ 117/117.25 strangles, 30- to 29.5/64

* 1,000 TYF 124.5 straddles, 1-34/64

* 2,000 TYZ 122/123/124 put flys, 7/64

* -6,300 TYZ 123 puts, 4/64

* +4,000 FVZ 116.25/117.5 call over risk reversals, 6/64

--MNI New York Bureau; tel: +1 212-669-6432; email: sheila.mullan@marketnews.com

[TOPICS: MTABLE,MNUEQ$,M$U$$$,MR$$$$,M$$FI$,MN$FI$]