US TSYS END MIXED/FLATTER;EYE TUE-WED FOMC/TAPER PLAN;30Y BEST

     US TSYS SUMMARY: Treasuries ended Fri mainly weaker except for the 30-year

bond as mild caution crept in ahead of next wk's Tue-Wed FOMC mtg and expected

Fed balance sheet reduction plans to start in Oct. 

- The US govt bonds began NY weaker, flatter, then drew dip buying on soft -0.2%

retail sales and a 5,000 5Y Tsy futures block buy, then 2way flows until black

boxes' FX-tied buying as US$ softened vs Jpn yen; later black boxes sold Tsys as

the US$ gained. 

- Tsy futures had a quiet end to week, with mkts not reacting much to second N

Korea missile launch in 2 months over northern Japan. Aug Indl Prodn -0.9%; July

business inv +0.2%, as expected. 

- Flow 2way in short end to intermediates, position squaring into wknd, some

option tied selling, and steepener unwinds. 30Y bond at profit but 10Y, 3Y

auctions at loss. Tsys saw 2way program trading, buying in 5Y, 30Ys but selling

in 7Y, 10Y. Tsys improve off low amid MBS-tied cross-over bid as Fed bought

"almost $2.0 billion in Agency MBS," said traders. 

- TSYS 3pm ET: 2Y 1.384%, 3Y 1.525%, 5Y 1.804%, 7Y 2.032%, 10Y 2.202%, 30Y

2.771%.

US TSY FUTURES CLOSE: Mixed by the close, curve flatter all session. Quiet end

to the week w/Tsy futures opening mixed, curve flatter as long end adds to Thu's

rally, bottom half overnight range on decent volume. Markets growing inured to

second N Korea missile launch over northern Japan. Current futures levels: 

* Dec Ultra bonds up 9/32 at 167-23 (167-11L/168-06H) 

* Dec 30-yr Bond futures up 3/32 at 155-02 (154-24L/155-15H) 

* Dec 10-yr futures down 3/32 at 126-10 (126-06.5L/126-18H) 

* Dec 5-yr futures down 2.75/64 at 118-01.5 (118-00L/118-07.25H) 

* Dec 2-yr futures down 1.5/32 at 108-00.75 (108-0.5L/108-03.25H)

US EURODLR FUTURES CLOSE: Mildly lower, at/near low end narrow session range,

quiet end to week. Current White pack (Sep'17-Jun'18): 

* Sep'17 +0.000 at 98.672 

* Dec'17 +0.000 at 98.550 

* Mar'18 +0.000 at 98.470 

* Jun'18 -0.015 at 98.395 

* Red pack (Sep'18-Jun'19) -0.015-0.030 

* Green pack (Sep'19-Jun'20) -0.025 

* Blue pack (Sep'20-Jun'21) -0.015-0.020 

* Gold pack (Sep'21-Jun'22) -0.010

US SWAPS: Spds running steady/mixed after the bell, holding to narrow range all

session. Spd curve mildly flatter, light mixed flow heading into the weekend,

ongoing repo specials 5s, 7s and 10s buffer narrowing factors. OTC and exchange

traded option vol mildly lower heading into the weekend. Latest spread levels: 

* 2Y +0.25/25.00 

* 5Y +0.06/8.31 

* 10Y +0.06/-2.94 

* 30Y -0.06/-32.75

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

- Sep 18 Sep NY Fed Business Leaders Index (11.7, --) 0830ET 

- Sep 18 Sep NAHB home builder index (68, --) 1000ET 

- Sep 18 US Tsy $42.0B 13-week Bill auction 1130ET 

- Sep 18 US Tsy $36.0B 26-week Bill auction 113ET 

- Sep 18 Jul net TICS flows ($7.7B, --) 1600ET 

- Sep 18 Jul long term TICS flows ($34.4B, --) 1600E

Eurodollar/Treasury option summary

Eurodollar options, Sep options expire

Blocks:

1001ET

10k EDM 81/82p spds, 3.0 vs. 98.385/0.10%

Pit/screen:

+30k EDM 86c, 4.0 vs. 98.425/0.10%

+20k EDZ 86/87 1x2c spds vs.

EDZ 83p, 1.25 net/call spd ovr

14k EDZ 80/82/87/90p condors, 24.5

10k EDM 86c, 4.0 vs. 98.425/0.10%

10k EDZ 87c, 0.5

7k EDZ 81/82/83p flys

5k EDM 81/82p spds, 3.0

4k EDZ 86/88 1x2c spds vs. 85p, 1.75

1.5k EDH 81/82 4x1p spds, 0.0

15k EOU 83 combos, 0.0

5.5k EOH/E2H 86c spds, 0.0

+5k EOZ 85/86p spds, 1.5

+5k EOX 87c, 0.5

5k EOZ 81/82 2x1p spds

5k EOZ 80/81/82p flys

4k EOX 82/83c spds

+3k EOX 81 straddles, 18.0

+2.5k EOU 82p, 4.0

2k EOU 83c, 0.5

7.5k E2U 81 & 82 combos, 0.0

+5k E2Z 78/82 R/R, 0.5c ovr

+5k E2X 75/E3X 72p spds, 0.0 flattener

5k E2Z 82/87 1x2c spds, 0.5

2k E2Z 78/80/81p trees, 1.0

+/-10k E3U 890 combos, 0.0

2.5k E3Z 81/E3H 80 1x2c spds, 24.0

Tsy options:

+40k+ TYX 129/131c spds, 4,

(partial unwind 127/129/131c fly)

2k TYX 130/132+c spds

4.5k USX 160/162c spds, 10

1k USV 154/155p spds, 20-21

850 USZ 148/151/154 2x3x1p fly, 37

-1k FVV 117.5/118.2/1189.5p trees, 11

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

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