ASIA/US/EUROPE BD/STK RECAP: TSYS MIXED, FLATTER; EYE 30Y, CPI

     US TSYS SUMMARY: Treasuries prices open NY mixed, flatter, 7Y-30Ys higher,

others mildly weaker, after overnight range followed late NY Tue stabilization

above day's price lows. Seems Tsy technical factors and wait for Thu CPI will

dominate market's game plan, and watching 1pm ET US$12B 30Y bond reopening after

soft 3Y, 10Y auction. 

- TOKYO: Quiet start for Tsys, sideways trade w/mild bid into UK. Flow had

foreign central bank and end users buying in 2Y, 3Y notes. Jpn's Nikkei stk

index +0.5%, HKG's Hang Seng index down mildly. US Pres. Trump had dinner Tue

with three Democrats from Congress to talk about tax reform, Bloomberg said. 

- LONDON: Tsys had carryover bid in 5s and 10s but also mild long end selling

from real$ and hedge funds. Tsys slipped back to steady/mixed as new EGB supply

weighed on EGBs. Hedge fund buying in Tsys belly. Omega Advisors' Leon Cooperman

could see near term US stock correction said Bloomberg. Gold and oil both rose. 

- OVERNIGHT REPO: Specials: Tsy 3Y, 5Y, 7Y, 10Y all tight but not 30Y bonds. 

- US CORPS: NIB $1.0B 3Y, Mex City Airport Trst 10/30Y, Commonwealth Bk of

Australia 3/FRN, 5Y/FRN, 10Y; Shinhan Bk 10Y; Bahrain US$ sov Deal.

EGB SUMMARY: There was a strong domestic bid at the very long end of France that

appeared soon after the European morning and French debt smartly outperformed

Dutch and other semi core markets. The buying subsided just as quickly but the

15-30Y sector of France remains the best performer on the day with a 1.5bp

decline in yield on the day. 

- By contrast, watching the Bund contract has been like watching paint dry; it

has shown almost no movement at all. 

- Morning activity has been dominated by heavy supply. First off was a well bid

3Y and 7Y BTPs auctions, the 2036 saw less interest. The German 10Y auction also

saw a very good level of demand as did the 10Y PGB, which quickly saw a 2bp

tightening of the spread to Germany. 

- Gilts rallied on the back of weak average weekly earnings data but EGB markets

failed to capitalise on the Gilt market volatility. 

- The Greek finance minister mentioned that Greece was looking beat its primary

surplus forecast and plans to tap debt in the coming six to seven months

according to a Reuters interview.

GILT SUMMARY: Gilts trading mildly weaker after being modestly higher earlier

around 6:41am ET and paring some heavy losses of Tuesday, supported by

disappointing UK average weekly earnings. Prices are off best levels however,

weighed by 10-yr Gilt re-opening auction. 

- UK 10-yr yield +0.2 bps at 1.134%. 

- Gilts opened little changed and then ticked higher led by decent buying in the

short-end which initially bull steepened the yield curve. Although at the same

time traders reported seeing large selling in the short sterling strip as

markets priced in higher chance of an interest rate hike by the BoE this year. 

- Average weekly earnings remaining at 2.1% in the 3-months to July compared to

MNI median forecast for a rise to 2.4% than saw gilts squeeze higher. The move

was limited though as unemployment surprisingly dropped to 4.3% from 4.4%. 

- A drop in demand at the 10-yr Gilt re-opening auction for Stg2.5bln then

weighed slightly on Gilts, but they remained underpinned by expectations BoE

will continue to vote 7-2 for rates to remain on hold. - Breakevens have widened

in region of 1.8bps as markets see CPI remaining high.

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

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