US Treasuries are holding onto......>

US TSYS SUMMARY: US Treasuries are holding onto modest gains despite fading

lower during London session on back of higher than expected Eurozone flash

inflation. US 10-yr yield is 2.6bp lower at 2.9468% compared to intra-day low of

2.9301%, with yield curve flatter as 2s/30s is 3bp tighter.

- Tsy T-note future treaded water ahead of key BoJ monetary policy decision, but

then spiked higher as the Central bank made less adjustments to its asset

purchases and yield curve control policy than expected and added in dovish

forward guidance on rates.

- Tsy faded the move though at start of London trade, weighed by higher than

expected French flash inflation which then translated into the overall Eurozone

flash headline number coming in at 2.1%, above consensus of 2.0% and core rising

to 1.1% y/y vs 1.0% y/y.

- Eurodollar strip is slightly flatter as Blue contract rise by 2-2.5 ticks

while whites are steady to 1 tick higher. 30-yr swap spreads have widened by

1.2bp while long end of breakevens are touch tighter. 

- Attention now turns to US PCE and MNI's Chicago PMI for July.