US TSYS END MILDLY LOWER;TRUMP URGES TAX REFORM;AVOIDS N.KOREA

     US TSYS SUMMARY: Treasuries ended mildly lower after mild technical buys,

dip buying after morning sales on risk-on mood, strong US econ data. Pres. Trump

hailed US 2Q 3% growth and urged tax reform; he did not comment on N.Korea at

that venue. Tsys saw 2/30Y, 5/30Y flatteners. 

- US govt bonds began weaker after overnight consolidation followed Tuesday

safe-haven bid gains tied to N.Korea firing of missile over Japan. Mkt then

declined on stronger 3% 2Q GDP revision, firm 237,000 Aug US ADP private payroll

data. But market lifted off session low as US Pres. Trump said that there needs

to be more done to solve N.Korea problem than just talk, which spurred mild

safe-haven bid. 

- Mkt had muted late-morning 2way flow, but also 11:07am ET block buy of 5,000

10Y TYZ Tsy futures. Technical buying as cash 10-yr yld stayed below 2.155%.

Eurodlr futures had sellers in Whites-Reds after ADP. US Tsy futures near

wrapping up Sep/Dec roll into first notice date Aug. 31st. 

- TSYS OPTIONS: Big trade: total buy of 51,000 (pit/screen) TYX 128.5/130 call

sprds, 10- to 11/64 vs. 126-25/0.12% (midmorning pit buy of 525K at 11.) 

- US TSYS 3PM ET: 2Y 1.333%, 3Y 1.440%, 5y 1.723%, 7y 1.971%, 10y 2.143%, 30Y

2.747%.

US TSY FUTURES CLOSE: Modestly lower to steady in the long end, Tsy 2-10Y

futures hold to narrow range all session while long end support fades late.

Quiet session w/Sep/Dec Tsy roll volume close to a wrap, participants close to

sideline ahead Fri's Aug NFP release. Current futures levels: 

* Sep Ultra bonds steady at 169-08 (169-01L/169-23H) 

* Sep 30-yr Bond futures down 2/32 at 156-28 (156-23L/157-08H) 

* Sep 10-yr futures down 4/64 at 127-02 (126-31.5L/127-07.5H) 

* Sep 5-yr futures down 2.5/32 at 118-22.5 (118-20.5L/118-26H) 

* Sep 2-yr futures down .25/32 at 108-08.75 (108-07.5L/108-09.25H)

US EURODLR FUTURES CLOSE: Modestly lower for the most part by the close, short

end outperforming. Moderate overall volume, narrow range as safe haven support

wanes. Current White pack (Sep'17-Jun'18):

* Sep'17 +0.002 at 98.672 

* Dec'17 +0.000 at 98.580 

* Mar'18 -0.005 at 98.530 

* Jun'18 -0.010 at 98.485 

* Red pack (Sep'18-Jun'19) -0.015-0.020 

* Green pack (Sep'19-Jun'20) -0.020 

* Blue pack (Sep'20-Jun'21) -0.015 

* Gold pack (Sep'21-Jun'22) -0.015-0.005 

US SWAPS: Spds hold wider levels by the bell, spd curve bending steeper again,

but lead by long end this time around. Last several session spd curve steepening

lead by front end amid steady swappable corporate supply. Vacuum of long end

supply adding to latest move wider, specs, real$ bank portfolios and hedge funds

reportedly poised to fade the latest move as supply expected to ramp up later

next week. Outright rate paying and long end spd curve steepeners noted. OTC vol

steady to mixed, gamma sellers at bay ahead Fri's Aug NFP. 

Latest spread levels: 

* 2Y +0.38/20.56 

* 5Y +0.19/5.62 

* 10Y +0.94/-5.06 

* 30Y +1.19/-34.81

OUTLOOK: *** Data/speaker calendar (prior, estimate):

- Aug 31 Jul challenger layoff plans (-37.6%, --) 0730ET

- Aug 31 26-Aug weekly initial jobless claims (234K, 236K) 0830ET

- Aug 31 Jul personal income (0.0%, 0.3%) 0830ET

- Aug 31 Jul current dollar PCE (0.1%, 0.4%) 0830ET

- Aug 31 Jul total PCE price index (0.0%, --) 0830ET

- Aug 31 Jul core PCE price index (0.1%, 0.1%) 0830ET

- Aug 31 Aug ISM-Milwaukee Mfg Index (56.98, --) 0900ET

- Aug 31 Aug MNI Chicago PMI (58.9, 59.7) 0945ET

- Aug 31 27-Aug Bloomberg comfort index 0945ET

- Aug 31 Jul NAR pending home sales index (110.2, --) 1000ET

- Aug 31 25-Aug natural gas stocks w/w 1030ET

- Aug 31 30-Aug Fed weekly securities holdings 1630ET

Eurodollar/Treasury option summary

Eurodollar options,

Block:

0213ET

-7.75k EOU 85c, 1.5

Pit/screen:

+5k EDF 83p, 1.75

+2.5k EDZ 83/85 2x1p spds vs. EDV 85p, 1.5 net

+2.5k EDZ 82p, cab

+2.5k EDZ 83/85/87c flys, cab

2k EDZ 83/86/87c flys, 14.5

+25k EOU 83p, 1.5 vs. 98.43

+5k EOZ 82p, 5.0

+5k EOZ 80/81/82p fly vs. EOZ 86c, 0.5db

-5k EOH 88/90c strip, 2.0 vs. 98.31

-5k EOH 88c, 1.5 vs. 98.36/0.05%

+5k EOZ 73/78 4x1p spds, 0.0

+2.5k EOZ 80/81p spds, 1.5

-2.5k EOM 78/81 3x2p sdp w/

-E2M 76/80 3x2p spds, 24.5 cr

-2k EOX 83 straddles, 16.0

20k E2Z 78/81 2x1p spds

+10k E2U 81p, 1.0 vs. 98.25/0.12% vs.

-E4U 77p, 1.0 vs. 98.905/0.12%

+3k E2V 81/82p spds, 6.0

+3k E2U 81/83 R/R, 0.0p ovr

-2.5k E2Z 82p

+5k E3U 80p, 2.0 vs. 98.095/0.25%

Tsy options

Pit/screen:

+100k TYX 128+/130c spds, 10-11 cvrd

15k TYX 129c, 12

+3k TYX 127 straddles, 138

+2.5k TYX 128c, 24

-2k TYV 125+/125.7p spds, 4

-2k TYV 124.7/125+p spds, 2

+1k TYV 128/129c spds, 6

1.75k USV 149/152 2x1p spds, 5

1.75k USV 148/151 2x1p spds, 1

--MNI New York Bureau; tel: +1 212-669-6432; email: sheila.mullan@marketnews.com

[TOPICS: MTABLE,MNUEQ$,M$U$$$,MR$$$$,M$$FI$,MN$FI$]