US TSYS: RISK-OFF EVAPORATES ON STALE US/CHINA TRADE HEADLINES

US TSY SUMMARY: Table tennis day -- where the ball was US/China trade headline.

Ironically, most not exactly breaking new information as China delegates travel

to DC for negotiations ahead threat of tariff increase Friday. 

- Early bid in rates evaporated mid-morning after "WH SPOKESWOMAN SANDERS..U.S.

RECEIVED INDICATION CHINA WANTS TO MAKE TRADE DEAL" Rtrs.

- Tsy futures extend session lows after second tail in a row -- latest $27B 10Y

note auction (9128286T2) awarded 2.479% rate (2.466% in April; 3.100% avg) vs.

2.465% WI; 2.17 bid/cover (2.55 previous).

- Aside from Tsy auction, second day of heavy corporate issuance w/ $20B IBM

8-tranche launched late after $19B Bristol-Myers 9-tranche on Tuesday.

- On tap for Thursday: Weekly jobless claims; trade balance for March; Apr Final

Demand PPI; March wholesale inventories and sales; Fed weekly securities

holdings.

- The 2-Yr yield is up 1bps at 2.2946%, 5-Yr is up 2.7bps at 2.285%, 10-Yr is up

2.5bps at 2.4817%, and 30-Yr is up 2.7bps at 2.8914%.

US TSY FUTURES CLOSE: Trading at/near late session lows, holding narrow range

since rates extended lows following poorly received 10Y note auction. Late

levels:

* 3M10Y  +1.756, 5.662 (L: 0.181 / H: 6.022)

* 2Y10Y  +2.076, 18.893 (L: 16.156 / H: 19.12)

* 2Y30Y  +2.245, 59.832 (L: 57.082 / H: 59.987)

* 5Y30Y  +0.276, 60.712 (L: 59.138 / H: 61.374)

Current futures levels:

* Jun 2-Yr futures (TU) down 0.875/32  at 106-14 (L: 106-13.625 / H: 106-16.625)

* Jun 5-Yr futures (FV) down 5/32  at 115-18 (L: 115-17.25 / H: 115-26.25)

* Jun 10-Yr futures (TY) down 9/32  at 123-23.5 (L: 123-22 / H: 124-06)

* Jun 30-Yr futures (US) down 19/32  at 148-5 (L: 148-04 / H: 149-06)

* Jun Ultra futures (WN) down 29/32  at 165-24 (L: 165-21 / H: 167-10)

US EURODLR FUTURES CLOSE: Mostly weaker, short end bid since the 3M LIBOR set

(-0.0169 to 2.5451%, -0.0147/wk), levels at/near moderate session lows out the

strip, Greens underperforming. Current White pack (Jun 19-Mar 20):

* Jun 19 +0.005 at 97.465

* Sep 19 -0.010 at 97.520

* Dec 19 -0.010 at 97.540

* Mar 20 -0.015 at 97.650

* Red Pack (Jun 20-Mar 21) -0.04 to -0.02

* Green Pack (Jun 21-Mar 22) -0.045 to -0.04

* Blue Pack (Jun 22-Mar 23) -0.045 to -0.04

* Gold Pack (Sep 22-Jun 23) -0.04 to -0.04

US DOLLAR LIBOR: Latest settles resume 

* O/N -0.0004 at 2.3627% (-0.0151/wk)

* 1 Month -0.0114 to 2.4513% (-0.0153/wk)

* 3 Month -0.0169 to 2.5451% (-0.0147/wk)

* 6 Month -0.0121 to 2.5822% (-0.0351/wk)

* 1 Year -0.0076 at 2.7137% (-0.0318/wk)

STIR: Federal Reserve Bank of New York posts yesterday's EFFR:

* Daily Effective Fed Funds Rate: 2.40%, volume: $64B

* Daily Overnight Bank Funding Rate: 2.38%, volume: $160B

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

* Secured Overnight Financing Rate (SOFR): 2.44%, $1.069T

* Broad General Collateral Rate (BGCR): 2.41%, $481B

* Tri-Party General Collateral Rate (TGCR): 2.41%, $460B

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

09-May 0830 04-May jobless claims (230k, 215k)

09-May 0830 Mar trade balance (-$49.4B, -$51.1B)

09-May 0830 Apr Final Demand PPI (0.6%, 0.3%)

09-May 0830 Apr PPI ex. food and energy (0.3%, 0.2%)

09-May 0830 Apr PPI ex. food, energy, trade (0.0%, --)

09-May 0930 Fed Chairman Jerome Powell

09-May 1000 Mar wholesale inventories (0.2%, 0.3%)

09-May 1000 Mar wholesale sales (0.3%, --)

09-May 1030 03-May natural gas stocks w/w (123Bcf, --)

09-May 1045 Atl Fed Pres Raphael Bostic

09-May 1300 US TSY $19B 30Y Bond auction (912810SH2)

09-May 1315 Chi Fed Pres Charles Evans

09-May 1630 08-May Fed weekly securities holdings

US SWAPS: Mildly tighter for the most part, short end resisting move most of

session. Incoming corp supply (notably $20B IBM 8-tranche) contributing to move,

mild two-way in front end w/better rate paying in 2s. Latest spd levels:

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

Wed 3:00    +0.06/10.00    -0.31/3.62     -0.31/-1.94   -0.62/-24.88

1:30        -0.12/9.81     -0.44/3.50     -0.50/-2.12   -0.62/-24.88

12:00       +0.44/10.38    -0.12/3.81     -0.25/-1.88   -0.38/-24.62

9:30        +0.44/10.38    -0.25/3.69     -0.50/-2.12   -0.69/-24.94

Wed Open    +0.38/10.31    -0.19/3.62     -0.50/-2.12   -0.69/-24.94

Tue 3:00    -0.62/9.94     -0.69/3.75     -0.06/-2.00   -0.06/-24.81

Tuesday recap: Spds opened/held wider levels into midday, grinding tighter in

second half amid healthy dose of corporate issuance. 

PIPELINE: IBM Launched late

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

05/08 $20B #IBM 8-part (est. $20-25B):

----  $1.5B 2Y +50, $1.5B 2Y FRN L+/-, 2.75B 3Y +60, $3B 5Y +80, 

----  $3B 7Y +95, $3.25B 10Y +105, $2B 20Y +130, $3B 30Y +145

05/08 $400M #USAA Capital Corp WNG 2Y +37.5

05/08 $600M #Bell Canada 30Y +142, upsized from $500M

05/08 $Benchmark Asia Infrastructure Inv Bank (AIIB) 5Y +8a

05/08 $3B *EIB 5Y +6

05/08 $600M *Reinsurance Group 10Y +145

05/08 $1.5B *MGM China $750M 5NC2, $750M 7NC3

05/08 $450M *AvalonBay 10Y +82 Upsized from $350M 

Eurodollar/Tsy options:

Eurodollar options, Pit/screen: 

* +20,000 short Dec 75/77/80 call flys, 5.5 vs. 97.85/0.10%

* +25,000 Oct/Dec 72/73 put spd spds, 0.75-0.125

* 3,000 Green Jun/Green Sep 78 straddle spds, 13.5

* +3,000 Mar 68/71 2x1 put spds, 0.5

* 4,000 Red Sep 63/67 2x1 97.785/0.10%

* -7,000 Sep 75/76/77 call flys, 2.0

* +10,000 Sep 76/77/78 call flys, 1.0

* +10,000 Blue Jun 76/77/78 call trees, 3.0

* -5,000 Blue Mar 75 puts, 12.0 vs. 97.725/0.30%

* +5,000 Dec 72/73 put spds, 2.5

* +15,000 Jul 76/Sep 78 1x2 call spd, cab net

* 4,000 Oct/Dec 72/73 put spd spd, 0.75

* 5,750 Dec 73/75/76 call flys w/Dec 75 calls, 7.0 total

* +9,000 short Jun 78 calls, 5.5 vs. 97.765/0.34%

Salient overnight trade/blocks

* 40,000 (half blocked) short Dec 75/77/80 call flys, 5.5

* 20,000 short Mar 73/77 call spds, 17.5

* 6,000 Green Jun/Blue Jun 77/78 call spd spd

* 2,000 Green Jun 76/77 2x1 put spds

Tsy options, Pit/screen:

* -9,000 wk2 FV 115.75 calls, 7/64 vs. 115-21.5/0.40%

* -2,300 USN 146/150 strangles, 41- to 40/64

* +5,000 TYN 123.5/125 call over risk reversals, 0.0

* >+3,000 FVU 110.75 puts, 1.5/64 earlier

* 5,000 TUM/TUN 106.2 call spd, .5/64

* +4,000 USM 145/149 strangles, 50/64

* 3,000 TYU 123 put spds, 30/64 vs. 124-09.5

* 1,000 TYN 122.5/123/123.5 put trees, 1/64

* 1,955 TYM 124.5/125.75 call spds, 11/64

* +2,000 TYM 124.5/125.75 call spds, 11/64

* 2,100 TYN 122.5/123/123.5 put trees, 1/64

* 1,300 FVN 112.75/114.25 2x1 put spds, 0.0

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

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