All eyes have been on the high......>

US TSYS SUMMARY: All eyes have been on the high yield and riskier markets over

recent sessions but fears subsided in Asian and early European trading. 

- The Nikkei equity index rallied 1.5% and the eurostoxx has added 0.75%. As a

consequence of the risk on feel, Treasuries are on the defensive. 

- Currently, the 2Y is +2.5bp at 1.708%, the 10Y is +3.9bp to 2.80%. This is

despite a 5Y vs traditional Bond future block trade in early Europe (10k FVZ7 at

116-29+ vs 2,350 USZ7 at 153.26) that we heard was a flattener.

- European bond markets were battered lower by a heavy set of auctions although

they have been fairly well bid.

- Swap spreads are wider across the curve as the market starts to look forward

to Turkey Day and the likely lull in the corporate issuance calendar. Besides

with the flat yield curve, the incentive for issuers to swap new issuance has

declined substantially. 

- There is a fairly full US economic calendar today although data are second

tier: initial claims, Philly Fed, import prices, IP and NAHB.