Tsys bid after the bell but well....>

US TSYS SUMMARY: Tsys bid after the bell but well off midmorning highs, near

lock-step rebound in equities of steep losses (SPX nearly traded unchanged in

late trade).

- Limited data, all about global equities that cratered overnight, strong

risk-off tone spurred heavy volume in rates (TYZ>2.7M). Hang Seng -3.08%, CSI

300 -2.66%; European indexes lower but weathered weakness better; SPX -62.0 by

midmorning to 2692.0L).

- ECB issue w/Italy budget continues to induce anxiety. BTP/Bund spd gapped

wider after Moody's annc'd sovereign downgrade as well as taking action on 12

banks, six banks and four Italian utilities.

- Fed speakers Bostic and Kaplan had little effect on mkts. Some focus on Wed's

BoC policy annc, 25bp hike to 1.75% widely anticipated; No major policy

developments are likely at this week's ECB meeting.

- Decent $38B 2Y auction (CUSIP 9128285G1) awarded a 2.880% rate (2.829%

previous) vs. 2.882% WI. Tsy cash/ylds: 2Y 99-24.25 (2.875%), 5Y 99-12.25

(3.009%), 10Y 97-17 (3.168%), 30Y 93-03.5 (3.367%).