TREASURY WRAP: T-NOTE FUTURES (U6) SETTLES 4 TICKS LOWER AT 108-14+

Yield curve steepens in quiet trade as attention turns to FOMC Minutes. At settlement, 2-year +1.3bps at 4.184%, 3-year +0.8bps at 4.255%, 5-year +1.6bps at 4.378%, 7-year +2.1bps at 4.537%, 10-year +3.2bps at 4.724%, 20-year +5.0bps at 5.307%, 30-year +5.0bps at 5.311%. THE DAY: The Treasury curve steepened on Monday in relatively quiet trade, with the move led by the long end. The 30-year yield broke above 5.300%, moving above the peaks seen following the July FOMC, when Chair Warsh's avoidance of forward guidance and apparent comfort with tighter financial conditions helping the Fed achieve its goals triggered a pronounced steepening of the curve. The highlight this week will be the FOMC Minutes on Wednesday, where attention will be on whether the preference for tighter policy extended beyond the three dissenters and whether other participants saw a case for a July hike. However, markets may ultimately look through the minutes given their backward-looking nature, particularly as they will not capture the subsequent softer inflation and employment data that have seen participants pare Fed rate hike expectations. Oil prices settled higher amid mixed geopolitical messaging. President Trump told Fox that the US is in contact with the IRGC through back channels, although Iran subsequently pushed back on the claim. Reports also suggested that a 60-day extension of the US-Iran ceasefire has been reached, although at the time of writing there has been no confirmation from either the US or Iran. Meanwhile, Trump threatened military action against Oman if it obstructs efforts to reopen the Strait of Hormuz. SUPPLY Notes/Bonds US to sell USD 16bln of 20-year bonds on August 19th and USD 8bln of 30-year TIPS on August 20th; all to settle August 31st Bills US to sell USD 95bln of 6-week bills on August 18th on August 18th, USD 92bln of 13-week bills and USD 79bln of 26-week bills on August 17th; all to settle August 20th. STIRS / OPERATIONS Fed Hike Pricing via CME Fed Watch: Sept 8.2bps (prev. 8.2bps), Dec 22.1bps (prev 24.2bps). EFFR at 3.63% (prev. 3.63%), volumes at USD 99bln (prev. USD 106bln) on August 14th SOFR at 3.62% (prev. 3.62%), volumes at USD 2.957tln (prev. USD 2.932tln) on August 14th NY Fed RRP op demand at 0.45bln (prev. 0.725bln) across 1 counterparties (prev. 1) on August 13th