Following weak US data released on Friday...>

US TSYS: Following weak US data released on Friday detailing that CPI rose by a

lower than expected 0.1% on the month in August, while the annual print was at

1.7% below the FOMC's 2% target. Natwest predict directionally that inflation

will be subdued throughout the summer with continued fiscal delays. Natwest also

predict we won't see a break out of current ranges until Q4, inflation in the US

Core CPI however increased by 1.7%, in line with expectations, which MNI

considers to be a more indicative measure of longer-term inflation trends.

-The US treasury curve has remained flat, with 2s10s and the 5s30s at -0.2bp and

+0.2bp respectively, Natwest suggest we may be entering a period where cross

currents will influence the curve. The 2s10s has remained within its recent

range of 86-98bp since the start of July and is some 30bp lower than levels at

the start of the year when Trump fueled optimism was high. 

-Natwest considers the 5's to currently be at fair value and say as oversold

conditions are beginning to normalize. They add we continue to favour the 10y

which is back on the rise at 2.2658% from a dip to 2.1888% on Friday after the

above mentioned weak inflation data was released.