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It's quiet now as traders are.........>

US TSYS/BUNDS
US TSYS/BUNDS: It's quiet now as traders are waiting for Friday Fed Chair Yellen
(10am ET) and ECB Draghi (3pm ET) speeches at the Jackson Hole Fed conference,
with some others also waiting for later Fed/ECB guidance. "There is some concern
over the ECB (Q/E taper) announcement, not necessarily for this week, but for
the Sept. 7th ECB meeting," said John Herrmann, interest rate strategist at MUFG
Securities Americas. 
- Meanwhile some felt US Eurodollar futures had not built in enough expectations
on Fed tightening. "The Eurodollars are only pricing in 25 bps for tightening
for all of 2018, and not even a 50% chance of a rate hike in the second half of
2017," said MUFG's Herrmann, citing Dec. 2017/Dec. 2018 Eurodlr futures spread
as the "flattest that curve has been since the Nov. 8th elections. "That is very
supportive of tighter US corporate credit spreads and higher equity valuations."
- But the Fed would prefer to build in a bit more cushion as "they want some of
the financial conditions to tighten, but the market is very disbelieving" about
further U.S. rate hikes, he added.

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