Geopolitical tensions continue to......>

US TSY FLOWS: Geopolitical tensions continue to support Tsy futures, near top

end modest overnight range. After a slow start (Japan out for holiday followed

by Obon holidays next week) avg overall volume as China came on-line. Equities

weaker again (emini -3.0, 2434.50), gold firmer (+0.70, 1287.04), oil softer

(WTI -0.25, 48.34).

- Asia, carry-over risk-off bid for rates added to Thu's curve flattening rally,

bank and real$ accts bought 10s and 30s. FX-acct buying as USD weakened.

- London, lagging Bunds, Tsys rates held gains into London hours, modest prop

and fast$ selling in 10s.

- Swaps, spds running steady/mixed, spd curve little flatter, light prop acct

rate paying in short end, expectations for more swappable corp supply next week.

- Eurodollars, modestly higher for the most part, short end a touch weaker

following latest 3M LIBOR set, +0.0059 to 1.3150% (+0.0032/wk). Decent volume in

Dec 1yr midcurve options.