A fairly substantial downside.......>

US TSYS SUMMARY: A fairly substantial downside miss in EMU April flash CPI data

and lower than expected UK service PMI has led to a recovery in US Treasuries

and the TYM8 contract hitting new weekly high of 119-22+. US 10-yr Tsy yield is

-1.7bps at 2.9495%, while curve is slightly flatter as long-end out performs

with 5s/30s 0.8bp tighter at 34.1bps.

- Core Eurozone flash inflation for April came in at 0.7% y/y down from 1.0% y/y

seen in March and well below consensus for a 0.9% y/y print. While Uk service

PMI for April edged up to 53.2 from 52.4, but this was lower than the 53.7

expected by markets.

- Due to Japanese holiday Thursday US Tsy cash trading was closed and the TYM8

stuck to a tight 3-tick range. Asia-Pacific participants paid more attention to

dovish elements of the statement, with T-notes edging higher as USD softened.

- Eurodollars are higher with white contracts +1 to +2.5 ticks, reds and greens

+2.5 to +3 ticks and blues +2 ticks. 

- Breakevens are a touch tighter while swap spreads are a touch wider.