Tsys traded on a softer footing on.....>

US TSY/RECAP: Tsys traded on a softer footing on Tuesday, as the U.S. returned

from the Labor Day holiday, with the curve sitting a touch steeper as T-Notes

went out near session lows.

- Strong ISM manufacturing data added pressure in early U.S. trade, with a

modest and brief rebound allowing sellers to reload.

- This came after Tsys dropped quickly on cross over to London trade as markets

faded fears of a large Italian budget deficit, before the space pared losses

alongside Bunds/Gilts.

- Fed's Bullard (non-voter) had little impact on the space as he reiterated that

he believes that the Fed is about where it needs to be on rates and that most of

his colleagues see a high chance of a September rate hike.

- The Eurodollar strip was mixed with EDU8 slightly higher, outperforming the

rest of the strip, which went out at the bottom of a tight range.

- There is plenty of data and Fedspeak this week, with participants also eying

corporate issuance, which is set to pick up after weeks of muted issuance.

- T-Notes last 119.31, U.S. 10-Year cash Tsy yields closed at 2.899%.