US Treasuries are trading...........>

US TSYS SUMMARY: US Treasuries are trading modestly lower heading into NY open,

weighed by easing of flight-to-quality bid, as China announces it will send

delegation to Washington for trade talks and reports that BoJ will allow greater

fluctuation in yields.

- 10-yr yield is 1.6bp higher than Wednesday's close at 2.8786% with the yield

curve slightly bear steepening between 2-yr and 7-yr, but bear flattening from

10-yr to 30-yr.

- TYU8 future was edging higher during first half of Asian session, but then

sold off sharply in reaction to newswire reports of China sending a delegation

to the US for trade talks in late August. Tsys then remained weighed by a

Reuters article quoting an ex-BoJ executive saying that the central bank could

allow yields to rise to around circa 0.40%.

- There was a slight recovery during first half of London trade but Tsy remain

weighed overall, looking for next directional move.

- Eurodollar futures are lower with exception of Sep18 contract which is 0.25

higher. Strip is steeper as green/blues fall 2.5 to 3 ticks.