Salient to Investors:

Ian Lyngen at CRT Capital said a slightly better non-farm payrolls report would trigger tapering – it is just a question of size and composition.

65 percent of economists expect tapering in September.

Stone & McCarthy Research Associates said the securities scheduled to be purchased by the Fed during September should have an average duration of approx 9 years, and will be concentrated in the 7-to 10-yr and 20- to 30-yr sectors.

Investors bid for 2.43 times the amount of 7-yr notes for sale yesterday, the lowest ratio since May 2009. The 5-yr sale on August 28 drew bids of $2.38 for every dollar sold in debt, the least since July 2009. The August 27 auction of 2-yr notes attracted the most demand since April.

Thomas Simons at Jefferies sees no evidence of increasing inflationary pressures, and the year-over-year deflator is far below 2 percent.

The Thomson Reuters/University of Michigan final index of consumer sentiment for this month fell to 82.1, above the median economist estimate.

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