Well bid but off session highs to......>

US TSY FLOWS: Well bid but off session highs to near middle session' range,

better volumes w/TYU >1.14M. Yld curves flatter but well off session lows as

futures scale back gains ahead of Wed's FOMC annc.

- Tsys extended early rally post data (US APR WHLSL SALES -16.9%,DURABLES

-17.3%, NONDURABLES -16.5%) strong bull flattening in yld curve.

- Chunky Tsy option flows saw pick-up in low delta call buying as underlying

climbed into the 10Y R/O, large seller (-34,700 TYN 139.5 calls, 4/64) as

futures dipped after 10Y R/O tailed 

- Tailed -- US Tsy $29B 10Y note auction re-open (912828ZQ6) awarded 0.832% rate

(0.700% last month) vs. 0.817% WI; 2.26 bid/cover (2.69 previous). Indirects

drew 56.74% vs. 66.15%, directs 11.76% vs. 13.34%, and dealers with 31.50% vs.

20.52% prior.

- The 2-Yr yield is down 2.2bps at 0.2044%, 5-Yr is down 4.5bps at 0.4025%,

10-Yr is down 5bps at 0.8253%, and 30-Yr is down 6bps at 1.582%.