ASIA/US/EU BOND/STK RECAP: TSYS MIXED; ASIA/JPN BUYING O/NIGHT

     US TSY SUMMARY: US Treasuries prices open NY mixed: 2Y through 7Y mildly

lower while 10Y, 30Y higher, amid curve flattening moves ongoing on 5/30Y, 2/30Y

and 2/10Y overnight. Mkt drifted off highs since 6:42am ET. US Tsy has unusually

early 11:30am ET $13B 2Y FRN reopening. 

- TOKYO: Tsys drew Asian real money and Japanese accounts buying in 10Y, 30Ys,

while FX-tied buying surfaced as US$ declined vs. Yen. Some did curve

flatteners. Tsys unfazed by strong Asian stocks strength, unusually. 

- LONDON: Tsys tracked core EGBS up until about 6:42am ET then profit-taking or

hedge sales started to surface. Also outright buying in 30Y bonds, fast money

buying in 10Ys and 30Ys, other buying in 5s and 10s, mixed action in 5s; fast

money and prop selling in 2Ys, 3Ys. Traders cited good volume in 30Y bonds. 

- TURKEY: Markets watching as Turkish President criticized central bank. 

- SWAPS: Mostly wider, 5y near steady; flow included USD47.3k DV01 5Y-10Y swap

FLATTENER and USD73.1k DV01 5Y-8Y-10Y Fly, paying belly. 

- EURODOLLAR FUTURES: Steady to mixed, Whites through Greens underperforming,

LIBOR sets continue to climb, 1M +0.0187 to 1.3129%. 

- US$ CORPORATES: Export Development Canada to do $1B global note. 

- OVERNIGHT REPO: Tsy 5Y note tightens to negative -0.10%, 10Y bid too at

+0.10%.

EGB SUMMARY: The morning European trading session saw the 10Y Dec Bund contract

grind higher and print repeated intra-day highs. The initial move higher

appeared to be on reports that the ECB isn't likely to make any major changes to

its guidance on monetary policy in the next year and rather go ahead with

smaller adjustments to exiting its QE programme according to BBG. 

- The uncertainty of German politics also appears to be on the markets mind as

German Chancellor Angela Merkel said that she prefers to head back to the polls

after coalition talks failed. After making intra-day highs of 163.27 the 10Y Dec

Bund contract has since faded to now trade at 163.17 due to disappointing 10Y

Finnish re-opening auction. 

- The 10Y Dec Bund yield is -1.6 bps at 0.343. The Bund-Bonos spread is 1.7bp

tighter at 113.4bp and the Bund-BTP spread is 2.9bp tighter at 141.7bp

GILTS: Dec Gilt future recently reversed this morning gains and is now 1 tick

lower at 124.95, taking cue from fall in US Treasuries. 

- The long-end of the yield curve earlier led move higher in Gilts Tuesday,

likely supported by overnight comments from BOE Ramsden that highlighted

dampening effects of Brexit on the UK economy and that could wait on wages and

domestic cost growth before hiking rates. Fixed income markets are brushing off

newswire repots that UK government is set to raise Brexit bill offer to EU in

order to start trade talks in December. 

- Gilt 10-yr -2.3bp at 1.267%. 

- Gilts reacted little to higher than expected rise in UK public borrowing as

prior months was revised lower, and to conflicting comments from BoE Cunliffe

and Saunders -- could possible wait to tighten policy further vs pass through

from last-year's sterling fall is far from over. Gilts did tick lower in wake of

surprise jump in CBI trends survey to highest level for 30-yrs 

- 5-yr breakevens are 1.2bp tighter while 10-yr and 30-yr are 0.6bp lower,

probably less than expected due to Stg11bln IL gilt redemption tomorrow and

decent demand seen at 10-yr Il gilt re-opening auction for Stg1.0bln.

--MNI New York Bureau; tel: +1 212-669-6432; email: sheila.mullan@marketnews.com

[TOPICS: MTABLE,MNUEQ$,M$U$$$,MR$$$$,M$$FI$,MN$FI$]