Treasury Watch

--Several news sources are coincidentally citing debt levels.  WSJ has a big chart outlining consumer debt levels in the US, warning that risks are growing.  However, the household debt obligation ratio is not flashing any warning signals as of now.  In the US the problem is likely to come from the corporate sector, where non-fin corp debt is near a 30 year high at 45% of GDP (Daily Shot).  I would note that much of this debt went to share buybacks, further stressing corporate balance sheets.  There is also a note that EM non-fin debt to EBITDA is at 1.7x, right near a 20 year high.  Potential Fed tightening, though small in magnitude, may have outsized ramifications.

--Little net change in rates yesterday though the curve edged slightly steeper.  Near one-yr euro$ calendars pushed to new highs as EDU6 and EDZ6 closed up 1 on the day.  Sept16/Sept17 spread closed up 1 at 35.  There was a buyer of about 30k TY 129.75/130.25 call spread for Friday (week 4) for 3/64's, which was an exit according to this morning's open interest data.  Sort of interesting in that Yellen is speaking Friday afternoon going into the holiday weekend; market conditions could be thin and any surprising comments may see exaggerated moves. (TYU6 settled 129-12).

--Several news services highlighted the G7 meeting, where Japan's Abe is pushing fiscal stimulus.  From Reuters: "Abe presented data showing global commodities prices fell 55 percent from June 2014 to January 2016, the same margin as from July 2008 to February 2009, after the Lehman collapse."  

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