When the best-laid plans to thread.....>

US TSY FLOWS: When the best-laid plans to thread the policy needle while

relaxing poolside in Jackson Hole go very wrong. Today's China tariff

retaliation and threat from Trump in response boosted the short end as 50bp cut

chances back above 50%. Equities hammered (ESU9 -72.5 late), Gold surged over

30.0 to north of 1528.0, US$ slammed vs. majors (US$/YEN around 105.30 late).

- Jackson Hole symposium resumes Saturday, but focus likely on G7 summit in in

Biarritz, France of which Trump will be attending. Note, UK mkts closed for one

day holiday Monday, Eurozone will be open for business.

- Don't be surprised by the HEAVY futures volume (TYU>3M, FVU>2M) as Sep/Dec

roll volume surged (both 5- and 10Y roll volume around 750-800K).

- While the US/China trade war took limelight from Jackson Hole symposium today,

many already squared and pared heading into event risk. Rate rally triggered

stops, Sep option expiration spurred further short covering on way up. Prop,

fast- and real$ buying intermediates to long end late as equities extended

session lows. The 2-Yr yield is down 9.7bps at 1.5147%, 5-Yr is down 10.2bps at

1.3994%, 10-Yr is down 9.5bps at 1.5182%, and 30-Yr is down 9bps at 2.0144%.