ASIA/US/EUROPE BD & STK RECAP:TSYS GAIN THEN EBB ON PPI,CLAIMS

     US TSYS: Treasuries began higher buy soon recent after higher than expected

0.4% Sept. core PPI and lower initial weekly jobless claims and lower continuing

jobless claims.

     US TSYS SUMMARY: Treasuries open NY higher after overnight action that

included solid Asian buying. Tsy will sell a 1pm ET $12B 30-year bond reopening.

- TOKYO: Tsys saw brisk Asian buying after mixed Wed NY close. Asian banks and

US macro hedge funds bought Tsys while Chinese entities did good buying. Asian

buying seen in 2Y and 5Y notes and real money buying in 30Y Bonds. 

- Japanese govt bonds ended steady. Japanese Nikkei stock index also hit a

record high as PM Abe looks to be heading for big election win. 

- LONDON: Tsys still higher too. One 3:21am ET (8:21 BST) apparent block buy in

TY 10Y Tsy future occurred after European open, boosting mkt. Many US$ swap

curve flatteners arose in 3-5Y and one large 5-10Y flattener. And fast$ bought

the CTD into 5Y FYZ7, the Feb. 22 issue. 

- Citigroup 3Q earnings: $1.42/share vs $1.32 estimate; Citi F/I $2.88B rev

matching est (BBG). JPM earned adj $1.75/shr in 3Q, exclud CVA, legl benefit vs

$1.65 est. 

- OVERNIGHT REPO: Tsys 2Y, 3Y, 5Y, 10Y; old 2Y, old 5Y, old 7Y tight. 

- HIGH GRADE CORPORATES: Turkiye Petrol to do 7Y. FHLBanks to do 2Y note.

EGB SUMMARY: There were large swings in the German Bund markets with an initial

increase in the price of the 10-year Bund contract. This was led higher by a

4364 contract trade on the TY that set of some stop-losses in the Bund. 

- Later in the morning we saw a reversal of the gains made earlier in the Bunds

possibly led by the UK Gilt markets with traders possibly positioning themselves

for the press conference on Brexit talks. Market participants noted that very

little volume was seen in the European fixed income markets. 

- The Italian curve outperformed this morning, helped by a strong auction and

the passage of three parliamentary ballots on the voting reforms, joined by the

fourth and final vote in the past few minutes. The middle part of the curve

appears to be performing best with the 7-year BTP down -2.2bp. 

- Spanish debt started the trading session well but struggled as the morning

wore on.

GILT SUMMARY: UK Gilts have reversed opening move higher and are now trading

modestly lower, albeit in very light volume, as markets prepare for yet another

Brexit press conference that is more than likely to confirm that very little

progress has been made and therefore cannot move onto trade talks. 

- 10-yr yield 0.5 bps higher at 1.384%. 

- Gilts opened modestly higher, supported by overnight move in US Treasuries

following dovish undertones in FOMC minutes and then squeezed higher, once again

led by USTs following a block buy in TYZ7. 

- Sentiment does not seem to favour UK markets at the moment as Sterling also

drops back towards it overnight lows against the USD and Euro, despite the fall

in Gilts. 

- There was little market reaction to BoE credit condition survey that showed

availability of credit falling. 

- UK Breakevens are sharply tighter with 5-yr and 10-yr circa -3bp, while the

largest move in swap spreads is seen in the 30-yr at -1.6bps.

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

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