It has been difficult to............>

US TSYS SUMMARY: It has been difficult to disentangle the movement in the JPY

and 10Y UST markets so far this week as the correlations has been near 100%.

This simply suggests that the risk-trade is dominating and with tensions easing

in the Korean peninsula, Treasuries weakened.

- Despite the rise in yield, the 10Y UST yield is still around 3bp lower since

before the "Fire and Fury" Tweet by Donald Trump a week ago. The 10Y was last at

2.245%, a rise of 2.6bp compared to the NY close.

- European trade is thin because of widespread Assumption Day holidays but the

improvement in the Bund and Gilt market prices has not included the Treasury

market.

- NY Fed's Dudley spoke overnight and suggested that the Fed could start

trimming its balance sheet in September and favours one extra rate hike this

year. Dudley is considered to be on the dovish side of the FOMC and so can be

blamed for some of the Treasury market weakness. 

- The UK released weaker-than-expected core CPI data and German GDP data came in

close to expectations.