While rate cut chances moderated.......>

US TSY FLOWS: While rate cut chances moderated some on Tue's late risk-on move,

multiple domestic and foreign risk factors (curve inversion spurring renewed

recession worries, US/China trade, slowing global economy, sharp equity

sell-off, etc) has chances of rate cuts back on the rise (50bp cut at Sep 18

FOMC >55%).

- Decent volumes but not heavy volumes, typical for thin summer trade is

exacerbating moves, headlines exceptionally problematic. Tsys well bid across

the curve, just off late session highs amid decent volume (TYU>1.9M), yld curves

flatter all session w/2Y10Y joining 3M10Y in inverted territory (new 12+ year

lows). 30YY dropped to new all-time low of 2.0139% earlier; WNU triggered level

1 circuit breaker (+3 pts) after the open (194-06).

- Two-way flow w/better real$, bank and insurance buying intermediates to long

end, steepener unwinds, growing roll volume, heavy 2-way option volume, wing

buyers (puts fading rate rally, fear of ZIRP spurring upside call buying)

- The 2-Yr yield is down 8.3bps at 1.5832%, 5-Yr is down 8.5bps at 1.499%, 10-Yr

is down 11.6bps at 1.5877%, and 30-Yr is down 13.4bps at 2.0295%.