ASIA/US/EUROPE BD/STK RECAP:TSYS DIGEST ADP; AUG REFUNDG NEXT

     US TSYS SUMMARY: Treasuries see mild dip buying on +178,000 July ADP

private payroll report.

US TSYS SUMMARY: Treasuries prices opened NY lower ahead of 8:15 July ADP US

private payrolls report and 8:30am ET US Tsy Aug refunding auction announcement.

Tsys also pressured by a sharp fall in UK Gilts, and by large 7:06am ET recent

block sale in Tsy futures of 13,820 TYU 10Y futures at 126-02. 

- TOKYO: Light buying early in Tsy 2Y through 10Y notes, while banks also bought

some 5Y notes. Then some Tsys sales by Asian central banks in five year notes

and shorter maturities. Japan's Nikkei gain spurred some risk-on selling. 

- LONDON: Tsys slightly weaker as German Bunds drew good buying but also put

buying. However Tsys also saw some US accounts buying and also credit tied

buying; other banks sold sevens and tens. European stocks traded lower while US

stock futures traded higher due to above expectations Apple earnings and

revenues out late Tuesday. Gilts hurt by NIESR comments overnight as it urged

BOE to raise rates in 1Q 2018, start to debate policy normalization. 

- US SWAPS: Running wider, spread curve flatter; macro paying in intermediates,

tens and thirties. 

- US EURODLR FUTURES: Mildly lower across strip, Whites-Reds outperform. 

- HIGH-GRADE CORPORATES: Wed: NIB $500m 2Y.

EGB SUMMARY: German Bunds are trading modestly higher but with little

conviction, having shrugged off earlier weakness following solid demand at

German 10-year re-opening auction, and Gilts bounce off session lows. German

10-yr yield is 0.1bp lower at 0.49%, while curve is little changed.

- Bunds opened little changed Wednesday with little direction seen from Asian

markets overnight and lack of Eurozone data also seen to change market

sentiment, with only the German 10-yr auction seen as the key event. In the end

the auction went off without a hitch and cover came in at 1.5 times, supporting

a mild bid in Bund futures. 

- The long-end of EMU Periphery bonds have recovered from earlier pressure which

saw them trade around 2bp to 3bp higher as markets looked ahead to Spain and

French bond auctions tomorrow. Greece is the stand-out underperformer though

with Bund/Greek 10-yr spread 7bp wider despite lower yield and higher demand at

Greek 26-week T-bill auction. - There was not much market reaction to Eurozone

June PPI data that came in-line with expectations at -0.1% m/m.

GILTS: UK Gilts declined amid pressure from the get-go Wednesday, seen weighed

by overnight comments from the UK's National Institute of Economic and Social

Research (NIESR). However, prices have pared losses on the back of mild profit

taking, helped by weaker than expected construction PMI. 

- Gilt 10-year yield is +2.2 bps at 1.2323%. 

- Gilts opened much weaker as NISER called for the Bank of England to raise

rates in the first quarter of 2018 and to open up a debate on policy

normalisation, while expecting growth to pick up in the second half of 2017. 

- Gilts faded the lower move as future hit 1st resistance at 124.74 (21-DMA) and

in wake of weak July construction PMI (51.9 vs consensus of 54.0). This only

produced more sellers though and Gilt future eventually hit fresh session low. 

- This seemed to flush out the last of the sellers and buyers gradually returned

to the markets and pushed Gilts back up towards session highs. 

- UK swap spreads are mixed with short-end tighter, while the long-end is wider.

While Breakevens are little changed despite firmness in sterling.

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

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