Virus Spd Underscores Risk-off Bid For Rates

Tsys held near early session highs post data but continued to extend, finishing near the top end of session range, Yld curves adding to Mon's bull flattening.

• Sources reported early two-way flow in intermediates with carry-over bank portfolio selling in 10s, derivative selling out the curve vs. real$ buying 30s. Better buying in intermediates to the long end reported in the second half, albeit on lighter volume (TYZ around 825k by the closing bell) as the spread of COVID-19 spurred lockdown concerns.
• Underscoring, if not adding to the risk-off tone, French PM Macron is said to be "considering a national lockdown" as curfews set last wk have failed to stop the spd of the virus. Macron to address nation Wednesday evening.
• Other salient headlines: WH Press Sec MCenany: CHANCES ARE SLIM FOR STIMULUS BILL BEFORE ELECTION, Bbg; EU official warned there won't BE ENOUGH COVID-19 VACCINES FOR WHOLE EU POPULATION" until late 2021.
• Second half trade included decent deal-tied hedging, light steepener unwinds in 2s and 5s vs. 10s. So-so auction, US Tsy $54B 2Y Note (91282CAR2) drew 0.151% (0.136% last month) vs. 0.149% WI, bid/cover 2.41 vs. 2.42 previous. The 2-Yr yield is down 0.2bps at 0.1474%, 5-Yr is down 1.9bps at 0.3317%, 10-Yr is down 2.5bps at 0.776%, and 30-Yr is down 2.6bps at 1.5652%.