FED: US TSY 5Y AUCTION: NON-COMP BIDS $203 MLN FROM $70.000 BLN TOTAL

• US TSY 5Y AUCTION: NON-COMP BIDS $145 MLN FROM $70.000 BLN TOTAL

President Trump speaks to reports on Air Force One, discussing the ongoing discord with Iran. His comments indicated that there may be a return to talks and negotiations but he did not shy from highlighting the US military power if escalation is necessary. 

• President Trump indicated he has plenty of time to deal with Iran, and indicated that Iran wanted to meet, so they are meeting. His comments indicated that Iran requested a meeting through surrogates.
• President Trump’s comments come after The US halted strikes on Iran on Saturday and Sunday nights to allow talks to take place. Meanwhile, Iran also paused hostilities and spoke with Oman on Friday and Saturday to negotiate over passage of the Strait of Hormuz. Pakistan is also looking to restart US-Iran talks.
• Iran’s Deputy FM told Fars this morning that “the other side insisted that the southern route of the Strait of Hormuz be active, and we did not accept it”.
• The rhetoric between the US and Iran continues to oscillate between the potential for negotiations but the reminder that military operations could escalate at any time. No material changes have been made based on the latest commentary.
• WTI fell $1.17/bbl following President Trump’s comments.
• Brent SEP 26 down 8.3% at 88.79$/bbl
• WTI SEP 26 down 7.6% at 82.51$/bbl

Speaking to reporters on Air Force One, President Trump again reiterates his desire for lower rates. Ahead of Wednesday's FOMC decision, where no rate change is expected and a hike fully priced for the next meeting in September, he looks to paint the lack of lowering rates on the broader FOMC rather than Fed Chair Warsh. 

• "*TRUMP, ASKED ABOUT FED, RATES: WARSH IS GREAT, BUT HE HAS BOARD
• *TRUMP: WARSH'LL DO THE RIGHT THING, I KNOW WHAT HE WANTS
• *TRUMP: WARSH WANTS TO DO THE RIGHT THING
• *TRUMP: RATES SHOULD BE LOWERED" - bbg