US TSYS: US/CHINA TRADE OPTIMISM COOLING

US TSY SUMMARY: Tsys firmer, near top end of range after earlier chop. Heavy

futures volume driven again by March/June roll trade ahead Thu's first notice

date. Equities hovering near steady (SPX 2797.0) again on choppy trade as

US/China trade optimism cools. US$ index off late session lows (DXY -.370 at

96.043 vs. 95.948L).

- Tsys trimmed gains after Fed chairs prepared remarks released ahead testimony,

appears mkt was anticipated more of a dovish tone from largely boiler plate

comments; second round of selling on mid-morning data, pick-up in cons

confidence. Block buys TYH earlier, 2s10s steepener blocks via June futures,

deal-tied selling 3s-20s, Heavy option-tied two-way flow. 7Y Note auction

stopped through

- On tap for Wednesday: Dec advance goods trade gap, advance wholesale and

retail inventories, factory new orders, NAR pending home sales index for

January. Fed Chair Powell, Mon/Pol and State of Economy testimony to the House

Financial Services Committee. Tsy cash/ylds: 2Y 100-01.12 (2.480%), 5Y 99-21

(2.447%), 10Y 99-28 (2.637%), 30Y 99-27 (3.007%).

US TSY FUTURES CLOSE: Futures quietly inched higher in second half, extended

session highs late but pared gains late, 30Y outperforms, yld curves pared

steepening slightly, curve update:

* 2s10s +0.262, 15.741 (14.621L/16.667H);

* 2s30s +0.841, 52.763 (51.332L/53.512H);

* 5s30s +1.176, 56.104 (54.618L/56.806H);

Current futures levels:

* Mar Ultra bonds up 18/32 at 160-27 (160-07L/161-02H)

* Mar 30-yr Bond futures up 20/32 at 146-24 (146-04L/146-28H)

* Mar 10-yr futures up 8/32 at 122-09 (122-02L/122-11.5H)

* Mar 5-yr futures up 4.75/32 at 114-23.25 (114-19.25L/114-24.25H)

* Mar 2-yr futures up 1/32 at 106-01.75 (106-01L/106-02.5H)

MONTH-END EXTENSIONS: UPDATED Bloomberg-Barclays US month-end index

extension/forecast summary compared to the average increase for the past year

and the same time in 2018; TIPS 0.09Y; Govt inflation-linked, 0.11Y

*.....................Projected...1Y Avg Incr..Last Year

*US Tsys.................0.12........0.08........0.12

*Agencies................0.07........0.09........0.06

*Credit..................0.07........0.09........0.10

*Govt/Credit.............0.10........0.08........0.10

*MBS.....................0.04........0.07........0.08

*Aggregate...............0.08........0.08........0.10

*Long Govt/Credit........0.11........0.09........0.11

*Interm Credit...........0.06........0.08........0.08

*Interm Govt.............0.09........0.08........0.09

*Interm Govt/Cred........0.08........0.07........0.09

*High Yield..............0.02........0.08........0.05

US TSY FUTURES: Late roll update, close to wrapping up. June takes lead from

March Thursday (first notice February 28). March future's staggered expiration

on March 20 for 10s, 30s and Ultras, and March 29 for 2s and 5s. Latest volume:

* TUH/TUM appr 1,117,000 from -4.88 to -4.00, -4.75 last; >61% complete

* FVH/FVM appr 1,250,000 from -5.25 to -4.50, -5.25 last; >62% complete

* TYH/TYM appr 1,606,000 from -11.00 to -10.25, -11.00 last; >62% complete

* USH/USM appr 306,600 from 19.75-20.50, 20.25 last; >53% complete

* WNH/WNM appr 269,100 from -1-7.75 to -1-6.75, -1-7.75 last; >68% complete

US EURODLR FUTURES CLOSE: Higher across the strip, near midrange on decent

volume; note EDZ9/EDZ0 inversion extends to -0.200. Current White pack

(Mar'19-Dec'19):

* Mar'19 +0.007 at 97.400

* Jun'19 +0.015 at 97.405

* Sep'19 +0.020 at 97.410

* Dec'19 +0.030 at 97.395

* Red pack (Mar'19-Dec'20) +0.045-0.045

* Green pack (Mar'20-Dec'21) +0.045-0.035

* Blue pack (Mar'21-Dec'21) +0.035-0.030

* Gold pack (Mar'22-Dec'22) +0.030

US DOLLAR LIBOR: Latest settles

* O/N +0.0000 to 2.3886% (+0.0008/k)

* 1 Month +0.0139 to 2.4930% (+0.0087/wk)

* 3 Month -0.0098 to 2.6288% (-0.0174/wk)

* 6 Month -0.0061 to 2.6870% (-0.0190/wk)

* 1 Year -0.0049 to 2.8782% (-0.0134/wk)

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

* Secured Overnight Financing Rate (SOFR): 2.38%, $938B

* Broad General Collateral Rate (BGCR): 2.37%, $456B

* Tri-Party General Collateral Rate (TGCR): 2.37%, $438B

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

27-Feb 0700 22-Feb MBA Mortgage Applications

27-Feb 0830 Dec advance goods trade gap (-$70.5b, --)

27-Feb 0830 Dec advance wholesale inventories (0.3%, --)

27-Feb 0830 Dec advance retail inventories (-0.4%, --)

27-Feb 1000 Fed Chair Powell, MonPol $ State of Econ, Hse Fncl Svcs Comm

27-Feb 1000 Dec factory new orders (-0.6%, 0.9%)

27-Feb 1000 Dec factory orders ex transport (-1.3%, --)

27-Feb 1000 Jan NAR pending home sales index (99.0, --)

27-Feb 1030 22-Feb crude oil stocks ex. SPR w/w (3.67m bbl, --)

PIPELINE: $5.5B Mitsubishi 5-part leads

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

02/26 $5.5B #Mitsubishi UFJ Fncl 5-part: $1.5B 3Y +77, $500M 3Y FRN L+70, $1.5B

5Y +95, $1.5B 10Y +110, $500M 20Y +115

02/26 $700M #JB Hunt 7Y +135

02/26 $350M #Highwoods 10Y +160

02/26 $300M #Arizona Public Srvc 30Y +130a

02/26 $300M *Mid-America Apartments 30Y +135

02/26 $Benchmark CDP Fncl 3Y +25a

Eurodollar/Treasury Option Summary

     Eurodollar options, Pit/screen:

Block, 1507:18ET, net pay 2.0 on package

* 20,000 Sep 73 calls, 10.5

* 25,000 Sep 75 calls, 0.5

* 10,000 Sep 73 puts, 0.75

Block, 1424:13ET

* -10,000 short Sep 70 puts, 1.5 vs. 97.60/0.08%

Blocks, 1312:00-:06ET

* total +40,000 Jun 73/75 call spds, 4.5 vs. 97.405/0.46%

* +15,000 short Jun 82/87 call spds, 1.0 

* +10,000 Jun 73/75 1x2 call spds, 2.5 vs. 97.395/0.16%

* +8,000 Green Mar 81 calls, cab

* +10,000 short Sep/Blue Sep 77/81 call spd spd, 1.0db/steepener

Block, 1159:01

* 10,000 Mar 73 puts, 0.75 -- midmarket

* +45,000 Jun 73 calls, 6.0

* +20,000 Sep 75/78 call spds, 6.0

* 15,000 Sep 76/77/78 call flys on screen

* 2,500 Dec 67/70/72 2x3x1 put flys in pit, 3.0 net

* Update, total -40,000 short Mar 72/73/75 call trees, 7.0 vs. 97.495/0.30%

* +25,000 Dec 75/78 call spds, 6.0

* 4,500 short Apr 76/77 call spds, 2.5

* -8,000 short Mar 75/76 call spds, 2.25

* +10,000 Red Jun 82/85 call spds, 2.5

* +33,000 Red Jun'20 80/85 1x2 call spds on screen, 1.5

* Update, +20,000 Jun 71/72 put spds, 0.5

* +5,000 Green Mar 72 puts, 0.5

* +5,000 short Apr 76/77 call spds, 2.5

* 1,600 Red Mar'20 75 straddles, 37.0

* Update, +10,000 Jun 71/72 put spds, 0.5

* -7,000 Jun 72/73/75 1x1x2 call trees, 7.0 net, buyer paid 6.5 Monday

* +25,000 Jun 76 calls, 0.75

* 4,750 Jun 71/72 put spds, 0.5

Decent overnight trade, highlights

* +35,000 short May 76/77 call spds, 3.0

* +15,000 short Jun 82/87 call spds, 1.0

* +12,000 Blue May 82 calls, 1.0

* +10,000 Jun 73/75 1x2 call spds, 2.25

* +9,000 Jul 73/75 1x2 call spds, 1.0

* +12,000 Jun 76 calls, 0.75

* +10,000 short Sep 80 calls, 6.5

Tsy options, Pit/screen:

* 15,000 USK 133 puts, 2/64 on screen late

* +5,000 TYK 127.5/128 call strips, 4/64

* Update, total +107,900 FVK 112.25 puts, 1/64 on screen

* +63,000 FVK 112 puts, 1/64

* +41,000 TUM 105.25 puts, 1/64 on screen

* +8,500 TYJ 121.5 puts, 6/64 vs. TYM 122-16.5

* 2,000 TYK 121 puts, 9/64 vs. 122-20.5/0.15%

* 1,000 TYJ 121.25/123.75 strangles, 9/64

* 2,000 wk2 TY 122.7/123.5 call spds, 9/64

* +3,000 TYM 119.5/120.5 put spds, 6/64

* +2,000 wk1 TY 122.75/123.5 call spds, 6/64

* 3,600 wk2 FV 114.5/115 strangles, 10.5/64 covered vs.

* 1,200 wk1 TY 122.2 straddles, 28/64

* -12,800 USM 144 puts eon screen earlier from 1-0 to 60/64

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

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