*** Rolling lower, eminis dropped...>

US TSYS SUMMARY: *** Rolling lower, eminis dropped -30.0 at 2443.0, session

lows, did not lend much of a bid to Tsys after they pared gains/drifted off

first half highs earlier, desks invariably pointing to the third leg of wk's Tsy

supply w/$15B 30Y auction shortly.

- Tsy futures chopped around steady/mixed after the open, volume off mid-week

high. Continuing mkt angst over specific N Korean threats vs. US/Guam cross Pres

Trump's red line set late Tue.

- Delayed react to weekly claims (+3k to 244K), soft July PPI/final (-0.1%);

FRBNY Dudley: modest wage growth, sluggish productivity, inflation rise to 2%

over medium term. 

- Tsys marched higher, appr 35k TYU bought from 126-12.5 to -14, light fast$ and

prop acct selling in short end, better buying long end. FX-tied buying as US$

weakens vs. yen.

- High-grade corporate supply and pre-auction short setting as well as some

risk-off rate paying in swaps. Large Eurodlr sale, -40k EDU'17, 98.675.

- Bid softened late morning, desks citing auction set-ups.