The US Treasury market traded in....>

US TSYS SUMMARY: The US Treasury market traded in a tight range all the way

through the early Asian time zone until the EGB market opened. At which point

the 10Y yield jumped by 1.25bp and the Bund contract also fell soon after the

open.

- Over the past 5 days or so, the previous correlation between the US 10Y and

the JPY has shown itself. Thus, if the yen weakens the 10Y UST yield rises. The

Moritomo scandal is impacting Abe's position and the subsequent swings in yen

are driving the core debt markets.

- In early European trade weak commodity prices hit mining stocks and sent

European bourses and US equity futures indices lower. However, there will little

benefit provided to Treasuries from this stockmarket swoon.

- There is no US economic data today and it only get interesting when the FOMC

statement and press conference occur on Wednesday. On the supply front, there

are only the usual bill auctions and then a 10Y TIPS auction on Thursday.

- The 2Y UST was last +1.2bp at 2.303%, 10Y +1.6bp at 2.861%.