And BMO's Ian Lyngen added that....>

US TSYS/RESEARCH: And BMO's Ian Lyngen added that Treasuries, "by backing off

the local yield peak (2.40%)" for 10-year notes, "have built in a window for

potential weakness in the event of a stronger-than-expected inflation print

later this morning."

- "While an upside surprise might put 2.40% back into play, frankly we struggle

to envision a report that would inspire the needed confidence in the Fed's

narrative that lowflation is just a passing phase," Lyngen said. "That said, the

combination of better-than-anticipated retail sales and core-inflation could be

enough to temporary shift the tone in Treasuries toward something a bit more

bearish - although we would expect any such move to be short lived."