Tuesday, is turning out to be.......>

US TSYS SUMMARY: Tuesday, is turning out to be more interesting than it deserved

to be. Treasury prices are weaker as the Bund contract initially dived. However,

the recovery in the Bund was largely ignored in the past hour.

- Overnight in Asia, there was a decent risk-on trade with gold and the yen

weakening. In Europe, that trade became muddied as the Italian BTP market

suddenly collapsed on what looked like selling of the 5Y BTP bmk by fast money. 

- Initially, BTP weakness spilled into selling of core markets but more lately,

price action has improved. That said, as rates began to fall USD200mln of 5Y

swaps went through that appeared to be paying.

- At present, the 10Y UST yield is hanging close to 2.20%, the Bollinger band

base sits at 2.164% and the 2017 intraday yield low isn't far away at 2.103% and

easily achievable in a Jackson Hole week.

- The Treasury curve is making a small bear flattening of the curve.

- Comments from Mnuchin about the debt ceiling issue be solved by end-Sept has

provided no succour for bill markets, as the dislocation between Sep & Oct bill

rates remains.