The move lower late yesterday in....>

US TSYS SUMMARY: The move lower late yesterday in the UST markets could be

largely attributed to the speculation of John Taylor being the lead candidate

for the position of Fed Chair. 

- This helped push Treasuries above the critical level of 2.40% that the UST 10Y

broke through, which pushed yields higher.

- Trading in the Asian time zone was largely sideways.

- However, in London trading, USTs were pulled lower by a double combination of

weak gilts, which dropped further on the back of better than expected and a

modest slide in Bunds.

- The yen weakened in a consistent pattern with the rise in the 10Y Treasury

yield, more a interest rate differential than a risk trade that is driving the

relationship between these two instruments. 

- Heavy USD issuance is continuing from high grade issuers at the front end of

the curve. However, swap spreads have hardly budged.

- At present, the 2Y UST is 1.75bp higher at 1.61%, the 10Y is +2.7bp at 2.446%.

Data: Durable goods, new home sales and a 10Y note auction later in the session.