*** Rates weaker by the bell,.......>

US TSYS SUMMARY: *** Rates weaker by the bell, well off early session lows to

near top end of range on heavy volume in futures (TYH>1.7M) largely occurring in

early trade. Curves steepened but pared gains late (2s30s +2.666, 81.776

(82.683H/78.226L)). Early weakness on ECB Knot comments that ECB should end

asset buying "as soon as possible after September". Equities weaker (emini

-16.5, 2858.0), gold weaker (XAU -8.10, 1341.60), oil weaker (WTI -0.61, 65.53).

- Rates hammered Hammered into the open/rebounded after making new lows on very

heavy futures volume, ylds surged/broke range (2Y 2.144% +.0281, Sep'08 lvl; 10Y

2.718 +.058) despite month end extensions and potential for large pension

rebalancing out of equities into Tsys. Going to be a busy week w/POTUS State of

Union Tue, Tsy refunding annc and FOMC Wed, NFP Fri.

- Modest start for corporate issuance as earnings continue to roll out, heavy

option volume, long put sales on profit taking, others continue to buy/hedge

additional rate hikes. Position squaring ahead POTUS State of Union address Tue

evening; No rate change from Fed expected Wed.

- Late ylds: 2Y 2.116%, 3Y 2.252%, 5Y 2.492%, 7Y 2.625%, 10Y 2.694%, 30Y 2.940%