TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLES 7 TICKS LOWER AT 107-21

Short-end yields pause after Friday rally on hawkish Fed Chair Warsh speech, belly and long-end yields creep higher. At settlement, 2-year -1.0bps at 4.350%, 3-year -0.2bps at 4.410%, 5-year +1.6bps at 4.507%, 7-year +2.3bps at 4.623%, 10-year +2.8bps at 4.758%, 20-year +3.6bps at 5.248%, 30-year +3.6bps at 5.249%. THE DAY: The Treasury curve steepened to start the week amid a sold long end. US 2yr yields saw a slight unwind of the hawkish reaction seen towards Fed Warsh's speech on Friday. Perhaps this comes as money markets are still lacking conviction behind a September rate hike, with many on Wall St. remaining in the 2026 hold camp. With inflation currently the main concern for Fed officials and only one CPI report due before the Sept meeting, the bar is high for Warsh and others to join their three fellow hawkish dissenters at the July meeting (Hammack, Kashkari, Logan). Geopolitical newsflow dominated the tape on Monday, with US-Iran relations continuing to deteriorate with no end in sight. Inflationary concerns will once again increase as US-Iran strikes resumed over the weekend due to a preemptive US strike on Iranian missile launchers over concerns of the placement of sea mines in the Strait of Hormuz. Tensions in the short term are likely to continue, as suggested by Trump saying the US will respond to the Iranian attacks on US bases in the region. Ahead, focus will stick on the Fed with Barr due on Tuesday and the influential Waller on Thursday. Key data this week includes NFP, ISM Manufacturing PMI, JOLTS, ADP. SUPPLY US sold 3-mnth bills at high-rate 3.770%, B/C 2.77x; sold 6-mnth bills at high-rate 3.885%, B/C 2.63x STIRS / OPERATIONS Fed Hike Pricing via CME FedWatch: Sept 16.5bps (prev. 14.4bps), Dec 37.4bps (prev. 37.8bps). EFFR at 3.63% (prev. 3.63%), volumes at USD 123bln (prev. USD 111bln) on August 28th SOFR at 3.65% (prev. 3.64%), volumes at USD 2.808tln (prev. USD 2.836tln) on August 28th NY Fed RRP op demand at 6.726bln (prev. 0.175bln) across 4 counterparties (prev. 1) on August 31st