BMO's Ian Lyngen said Treasuries...>

US TSYS/RESEARCH: BMO's Ian Lyngen said Treasuries had "pressure" after 0.4% Aug

CPI and such "price action in turn led to a classic 'tale of 2 mkts'" as Tsys

front end accelerating "toward higher ylds and to a large extent holding the

bulk of the downtrade into the close. On the other hand, the longer-end of the

curve (10s and 30s) initially sold off, before finding some buying interest."

- He adds the 10-yr 2.225% yield peak "appears to be holding for the time being,

and that leaves us leaning more bullishly in the very short-term, with an eye on

2.15% as the next stop. This is obviously contingent on how the retail sales

release plays out" but CPI "was unquestionably this wk's main data event."

- He adds fact that Dec. rate hike odds "increased to 42% follows intuitively

and is certainly a positive from the Fed's perspective of keeping a final" 2017

rate hike "on the table." But there's "still a lot of data between now and the

Dec. 13 meeting, and much of it may be distorted by the hurricanes. The extent

to which the flood of incoming data proves too opaque for the Fed to be

confident in a move beyond next wk's tapering remains to be seen and from what

we gather we're not alone in our apprehension," he said.