*** Well off first half lows by.....>

US TSYS SUMMARY: *** Well off first half lows by the close, curves hammered

w/long end outperforming (re: rate hike driver weighing on short end,

recession-implied inversion unlikely on strong global eco's.

After initial post data sale, futures have ground back to mildly lower O/N range

amid moderate two-way flow, position squaring ahead extended holiday weekend for

U.S. Equities held strong gains (emini +14.5 2784.0), Gold higher (XAU +16.61,

1338.98), oil firmer (WTI +0.62, 64.42).

- Rates sold off/choppy trade after Dec CPI 0.1% and Retail Sales +0.4% both as

expected. Cross-market note: Tsys ground off lows while Gilts slammed by over 40

ticks in wake of Bloomberg newswire story on Spain and Dutch seeking a soft

Brexit; Bunds higher after ECB Weidmann downplayed rate change risk, trends

in-line. Short end hammered, Mar rate hike chances near 90%, 2Y yld tapped

2.0201%, Sep 2008 highs.

- In addition to better selling, real$ rolling forward, fast$ reversing,

sporadic bids below, scale in flatteners in 5s30s, fast$ doing steepeners.

- Late ylds: 2Y 1.998%, 3Y 2.114%, 5Y 2.345%, 7Y 2.476%, 10Y 2.548%, 30Y 2.853%