*** Tsys holding weaker levels......>

US TSYS SUMMARY: *** Tsys holding weaker levels after mixed $26B 2Y note auction

that drew 1.463% rate and moderate/low 44.15% indirects Tuesday. Equities

steady, Gold off sharply (-13.18, 1297.65).

- Multiple Fed speakers on day: Fed chairman Yellen said mkt should expect

inflation overshoot w/symmetric target (2% not a ceiling), remains data

dependent. Fed Gov Brainard, Phillips curve flatter than past, need to look past

inflation, unemployment to asses labor mkt. Fed Bostic, comfortable w/Dec hike

IF inflation picks up.

- Tsys opened mildly lower on light volume, long end on/off bid ahead open. Minn

Fed Kashkari said hiking rates as inflation remains weak a mistake late Mon.

- Little react to data, Redbook Sep store sales unch'ed vs. Aug, Cade-Shiller

home price index +0.3 M/M.

- Stronger US$ vs. Yen (112.290) spurred FX-acct selling, corporate and auction

concession, duration selling in first half. Otherwise modest two-way flow with

better selling around midmorning, light swap-tied paying short end, spd curve

flatteners, steepeners out the curve.