Tsys trading mixed after midday,....>

US TSYS SUMMARY: Tsys trading mixed after midday, curves extending flatter

w/long end outperforming. Consider 2s10s yield curve now flatter than the

Japanese Yen 2s10s curve at 21.5. But don't worry: "inferring economic causality

from statistical correlations" isn't appropriate according to FOMC minutes and

needs to be considered along with other economic data.

- Gist of Fed Chair Powell speech from Jackson Hole: economy robust with little

concern of overheating, gradual hikes appropriate if growth continues, inflation

stable little/risk of accelerating above 2%. Equities liked it, S&Ps +15.5 at

2873.5; US$ index receded, DXY -.573, 95.093, $/Eur gained +0.0088 1.1628, while

$/Yen off -.16 111.13. Gold surged after Thu's sell-off (XAU +21.22, 1206.77);

West Texas crude adding to midweek rally (WTI +0.76, 68.59). 

- Heavy Tsy futures volume (TYU>1.6M) due to surge in Sep/Dec roll activity

(TYU/TYZ>710k); Sep Tsy option expiry added to pick-up in flow. Otherwise late

summer torpor continued, little new positioning w/rate hike chances steady

(Sep>90%, Dec>60%). Tsy cash/ylds: 2Y 100-00 (2.620%), 5Y 100-04.75 (2.716%),

10Y 100-16 (2.815%), 30Y 100-23 (2.962%).