US Treasuries End With Curves Mildly Mixed

Treasuries prices opened a touch lower/curves a bit steeper but ended about where they started, though curves were mildly mixed. Attendance was light given week-long holidays in multiple Asian nations including China, which celebrates National Day during the Oct. 1-6 period.

It too was a somber day after a mass shooting in Las Vegas last night killed more than 50 and wounded more than 500 people. While Treasuries saw a slow start, futures led price action amid a sweep of 5,000 Dec 10Y followed by a block buy of 7,350 Dec 10Y in early trade.

Treasuries were bid up in early trade on new quarter demand and cash desks reported some trading account demand in cash 10Y, while others cash desks reported two way flows in 5/30Y curve and some forward rolling in 5Y and 7Y Treasuries. In US swaps, flows were two-way early with hedge fund demand in 10Y through 30Y spreads while other accounts sold in 5Y spreads. Also thematic was levered money fade of belly cheapening via some iteration of rec’g 2s/5s/10s or 5s/10s/30s.

Elsewhere, real money continued to buy E-Mini S&Ps while energy was hit back amid new month sell flows which were evident from asset managers and CTAs, and there’s fear of more Tuesday. A stronger USD, long positioning in the CFTC COT, bad technicals and fears of more selling after a strong third quarter all weighed on oil.

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