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*** Rates trading firmer by.........>

US TSYS SUMMARY
US TSYS SUMMARY: *** Rates trading firmer by midday after weaker start, curves
flatter, long end leading nascent risk-off move following latest terrorist
attack in Barcelona, Spain. Tsys off early lows on carry-over rumor NEC
head/economic advisor Gary Cohn to resign, later denied.
- Tsys opened weaker on light volume after EMA/Asian real$ selling/taking
profits in the belly overnight. Early 2/30Y, 2/10Y, 2/5Y curve steepeners.
- Limited react to early data: weekly claims (-12k to 232K) and June
manufacturing data (-1.8% vs. -1.2% exp), Philly Fed biz activity 18.9 vs. 19.5
in July, IP +.2%
- Tsys firmed up, curve flipped to flatter on Cohn rumors; FX-tied buying due to
weak US$/yen. Sellers in belly as Cohn rumor denied. Rates marched higher on
Spain terror event reports by late morning. Real- and fast$ covered shorts
- Swap spds mostly wider/spd curve flatter w/short end seeing broadest moves,
getting boost from risk-off bid in rates. Overall flow rather light, some fast$
receiver unwinds in short end, limited deal-tied hedging/incoming supply adding
to wider levels. 

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