BMO analyst Ian Lyngen noted Treasuries.....>

US TSYS: BMO analyst Ian Lyngen noted Treasuries "were rallying ahead of the ISM

release on the weaker July auto sales data, which suggests that the second half

of the year has started off on softer footing. Moreover, it's a continuation of

one of the primarily concerns from H1: just transitory? ISM came in at 56.3 vs.

57.8 prior, off the highs and slightly below the consensus of 56.5 although

still solidly above 50."

- He adds within "details, we saw prices paid gain 7 pts to 62.0 for the highest

reading since April. While this might be a sign of potential inflation, the

inability of the higher costs seen in Q1 to translate into realized inflation

has offset that concern on the margin. The employment component slipped to 55.2,

but was still mid-range for the year. June's construction spending numbers were

also weak, a development that suggests downward pressure on Q2 GDP revisions."

- He adds "overall, a softer set of data (particularly autos) that has reversed

the tone in the Treasury market."