US TSYS: TRUMP THREATENS HIGHER TARIFFS IF NO TRADE DEAL MADE

US TSY SUMMARY: Risk-off tone tied to US/China trade angst underpinned rates

through the NY session, yld curves flatter w/short end underperforming. Brief

risk-off unwind/knee-jerk reaction to late morning US/China trade/tariff relief

headline. Fast retrace: Tsys bouncing while equities are pared back gap move,

S&Ps near steady in late trade. Bbg posited US/China tying tariff relief to the

failed deal from May -- being used as a benchmark to decide how much tariffs

"should be rolled back in the initial phase". Risk-off resumed as US Pres Trump

said US would just raise tariffs "even higher" if China "doesn't make a deal".

- Reality check: despite the underlying risk, session was rather subdued

w/overall volumes inflated due to spike in Dec/Mar Tsy futures rolling ahead

next wks first notice on Fri's shortened post holiday session.

- Session flow included two-way swap flow in 2s-10s that tended toward better

receiving, sporadic payers faded move as 2Y spd re-inverted, large 2s10s

flattener Block, light deal-tied hedging.

- The 2-Yr yield is down 0.2bps at 1.5961%, 5-Yr is down 1.5bps at 1.6204%,

10-Yr is down 3.1bps at 1.7843%, and 30-Yr is down 4.5bps at 2.2541%.

TECHNICALS:

US 10YR FUTURE TECHS: (Z9) Watching Channel Resistance

*RES 4: 130-26 High Oct 11

*RES 3: 130-15+ High Nov 1 and key bull trigger

*RES 2: 130-02+ High Nov 4

*RES 1: 129-19 Channel top drawn off Oct 8 high and 50-day EMA

*PRICE: 129-12+ @ 16:53 GMT, Nov 19

*SUP 1: 128-10+ Low Nov 13

*SUP 2: 127-31+ Low Nov 7 and bear trigger

*SUP 3: 127-21+ Projected bear channel base drawn off Sep 3 high 

*SUP 4: 127-06+ 1.236 progression of Sep 3 - Sep 13 decline from Oct 4 high

10yr futures continue to consolidate following last weeks recovery. Initial

resistance at 129-12, Nov 7 high has been breached. The focus is now on 129-16,

channel resistance drawn off the Oct 8 high. Clearance of this level would

suggest scope for a stronger recovery and would open 130-15+, Nov 1 high. For

now the move higher is still viewed as a correction with support at 128-10+. The

bear trigger for a resumption of weakness however is at 127-31+.

AUSSIE 3-YR TECHS: (Z9) Shooting Star 

*RES 4: 99.368 -61.8% retracement of the Oct 8 - Nov 8 decline 

*RES 3: 99.350 - High Oct 14

*RES 2: 99.311/315 - 50.0% of the Oct 8 - Nov 8 decline / Oct 25 high

*RES 1: 99.285 - High Nov 15

*PRICE: 99.260 @ 16:55 GMT Nov 19

*SUP 1: 99.165 - Low Nov 13

*SUP 2: 99.130 - Low Nov 12

*SUP 3: 99.070 - Low Nov 8 and key support

*SUP 4: 99.055 - 1.000 projection of Oct 8 - Oct 22 decline from Oct 25 high

Having rallied for much of last week, Aussie 3yr futures found strong resistance

at Friday's 99.285 high. This resulted in a weak close just off the session low

to confirm an important reversal candle pattern known as a shooting star. As

long as prices remain below resistance at 99.285, the candle pattern suggests

the near-term risk is for a move lower. Scope is seen for 99.165 initially. A

break of 99.285 is required to resume recent gains.

JGB TECHS: (Z9): Correction Still In Place

*RES 3: 153.93 - High Nov 6

*RES 2: 153.62 - Low Sep 17 and former breakout point

*RES 1: 153.36 - High Nov 15

*PRICE: 153.25 @ 16:57 GMT, Nov 19

*SUP 1: 152.79 - Low Nov 14

*SUP 2: 152.44 - Low Nov 13 and key support

*SUP 3: 152.39 - 1.618 projection of Sep 4 - Sep 17 decline from Sep 25 high 

JGB futures saw a correction unfold in the second half of last week. With

futures still looking to push higher near-term, attention is on 153.62, Sep 17

low and a former breakout point. Clearance of this level would open 153.93, Nov

6 high. A failure ahead of 153.62 is required to suggest the return of bearish

behaviour. This would signal scope for a retest of last weeks low at 152.44. A

break here would confirm a resumption of the recent downtrend. 

US TSY FUTURES CLOSE: Risk-off tone underpinned rates through the NY session,

yld curves flatter w/short end underperforming. Update:

* 3M10Y  -3.733, 21.928 (L: 20.557 / H: 25.632)

* 2Y10Y  -2.938, 18.582 (L: 17.895 / H: 21.305)

* 2Y30Y  -4.219, 65.673 (L: 64.965 / H: 70.087)

* 5Y30Y  -2.959, 63.248 (L: 62.753 / H: 66.887)

Current futures levels:

* Dec 2-Yr futures down 0.5/32 at 107-20.375 (L: 107-19.125 / H: 107-21.375)

* Dec 5-Yr futures up 0.5/32 at 118-22 (L: 118-17.5 / H: 118-23.5)

* Dec 10-Yr futures up 3/32 at 129-13.5 (L: 129-05 / H: 129-16)

* Dec 30-Yr futures up 16/32 at 159-9 (L: 158-15 / H: 159-15)

* Dec Ultra futures up 40/32 at 186-22 (L: 184-29 / H: 187-00)

US TSY FUTURES: *** Late volume update. Reminder, mkt closed for Thanksgiving

holiday Thursday, Nov 28, Nov 29 first notice (March futures take lead quarterly

position) a shortened session. Dec futures don't expire until mid-late Dec (10s,

30s and Ultras on 12/19, 2s & 5s 12/31). Update:

* TUZ/TUH appr 159,900 from -6.38 to -5.75, -6.25 last; 14% complete

* FVZ/FVH appr 169,500 from -10.25 to -9.5, -10.0 last; 10% complete

* TYZ/TYH appr 87,800 from -1.25 to -0.25, -1.25 last; 9% complete

* UXYZ/UXYH 24,700 from -1-12.5 to -1-11.75, -1-12.5 last; 4% complete

* USZ/USH appr <1,000 from 26.0 to 26.25, 26.25 last; 7% complete

* WNZ/WNH appr 26,700 from 24.0 to 24.5, 24.0 last; 5% complete

US EURODLR FUTURES CLOSE: Moderately bid, at/near session highs by the bell on

lighter volume, lead quarterly EDZ9 w/<190k. Current White pack (Dec 19-Sep 20):

* Dec 19 +0.003 at 98.118

* Mar 20 +0.005 at 98.330

* Jun 20 +0.010 at 98.430

* Sep 20 +0.010 at 98.50

* Red Pack (Dec 20-Sep 21) +0.015 to +0.020

* Green Pack (Dec 21-Sep 22) +0.020 to +0.030

* Blue Pack (Dec 22-Sep 23) +0.025 to +0.030

* Gold Pack (Dec 23-Sep 24) +0.030 to +0.035 

US DOLLAR LIBOR: Latest settles

* O/N +0.0015 at 1.5369% (+0.0001/wk)

* 1 Month -0.0020 to 1.7216% (-0.0116/wk)

* 3 Month -0.0039 to 1.8949% (-0.0080/wk)

* 6 Month -0.0119 to 1.9070% (-0.0115/wk)

* 1 Year -0.0118 to 1.9416% (-0.0194/wk) 

US SWAPS: *** After drifting in a relative narrow range for so several weeks,

the 2Y swap spd leads narrowing of spds as it re-inverts: For the first time

ever -- 2yr spd spent most of August and September in inverted territory: mostly

between -0.5 to -2.0 extending all-time "inverted low" of around -4.0 on

September 18. Latest spd levels:

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

1300        -1.56/-0.75    -1.25/-6.31   -0.50/-10.75   +0.12/-39.75

1000        -0.56/+0.25    -0.25/-5.31   +0.12/-10.12   +0.50/-39.38

Tue Open    +0.19/+1.00    +0.06/-5.00   +0.12/-10.12   +0.25/-39.62

Mon 1500    -0.94/+1.06    -0.75/-4.81   -0.72/-10.25   -0.88/-39.88

STIR: Federal Reserve Bank of New York EFFR for prior session:

* Daily Effective Fed Funds Rate: 1.55%, volume: $62B

* Daily Overnight Bank Funding Rate: 1.55%, volume: $160B

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

* Secured Overnight Financing Rate (SOFR): 1.56%, $1.012T

* Broad General Collateral Rate (BGCR): 1.52%, $437B

* Tri-Party General Collateral Rate (TGCR): 1.52%, $414B

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

20-Nov 0700 15-Nov MBA Mortgage Applications (9.6%, --)

20-Nov 1030 15-Nov crude oil stocks ex. SPR w/w

20-Nov 1400 Oct FOMC minutes

PIPELINE: S&P Global and Estee Lauder launched earlier

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

11/19 $1.8B #Estee Lauder $500M 5Y +50, $650M 10Y +70, $650M 30Y +93

11/19 $1.1B #S&P Global $500M 10Y +73, $1B 30Y +103

11/19 $600M #Vereit 10Y +145

Later in week/month:

11/21 $7B Centene Corp 8Y, 10Y

11/?? Western Union

Chatter (may not issue until early 2020) 

?/? Sprint

?/? T-Mobile US

Eurodollar/Tsy options: 

Eurodollar Options

* -6,500 short Dec 81/88 call spds, 38.0 

* +5,000 short Dec 81 puts, cab

* +5,000 Dec 81/82 1x2 call spds, 1.5

* Update, near +10,000 Mar 82 puts, 4.0

* 6,000 Sep 81/83 put spds vs. 83/86 call spds on screen

* 2,500 Apr 83/87 1x2 call spds, 6.0

* -3,000 Jun 90 calls, 80.0 vs. 98.425/100%

* Ongoing, over 10,000 short Jan 87 calls over short Jan 82/83 put spds, 1.5 net

adds to 40k Block at 0.5

* +10,000 short Feb/short Mar 87 call spds, 1.75 net, short Mar over

* +10,000 Red Dec 100 calls, 0.5

* +5,000 Jan 86 calls, 1.0

* +5,000 Mar 81/82/83/85 call condors, 6.5 vs. 98.26/0.05%

* another 5,000 short Jan 87 calls over short Jan 82/83 put spds, 1.5 net adds

to 40k Block at 0.5

* Update, total +10,000 Blue Dec 82/86 call over risk reversals, 0.5 net vs.

98.435/0.35%

Recap overnight trade, Blocks

* Block +40,000 short Jan 87 calls 0.5 over short Jan 82/83 put spds at 0229ET

* >15,300 Jan 86 calls, 1.0

* 5,000 Mar 83/85/86 call trees 

Tsy options:

* +27,000 FVH 114.5 puts, 1.5/64

* -2,300 TYH 126/132 strangles, 29/64

Hearing sub-cab bid in 10Y puts hit

* +12,000 TYH 117.5 puts, cab-7, adds to myriad way-OTM options bought in 2s, 5s

and 10Y options late Monday

Recap overnight trade,

* 20,000 TYG 131.5/132.5 1x1.5 call spds

* >9,400 TYZ 130 calls, 2/64

* >3,400 FVZ 118 puts, 1/64

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

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