ASIA/US/EUROPE BD & STK RECAP: TSYS MIXED; MON US 2Y,5Y AUCTNS

     US TSYS SUMMARY: Treasuries open NY mixed: front end flat and long end

mildly weaker, 5/30Y curve mildly steeper after overnight consolidation range.

Tsy today has very busy auction schedule: 11:30am ET US$26B 2Y auction and 1pm

ET $34B 5Y auction, plus usual bill sales. 

- TOKYO: Treasuries followed Fri US gain with mild weakness, recovering a bit

into UK cross. Foreign central bank buying arose in 2Y, 3Y notes. BOJ Kuroda had

interview w/ BBG at Jackson Hole, said BOJ will have "extremely accommodative

monetary policy..for some time; said current 4% Jpn growth "is excellent" but

not sustainable; "around 2% growth is likely." 

- LONDON: Bonds quiet with UK bank holiday, thus consolidation; neither ECB

Draghi nor Fed Chr Yellen surprised as Jackson Hole speeches avoided

econ/policy. Macro fund selling arose in 5Y Tsys, with pre-auction shorts into

2Y,5Y auctions. Tropical Storm Harvey pushed NYMEX oil prices down but gas

prices up. Gold up. European stocks declined mildly; US stock futures up a bit. 

- US SWAPS: Mostly wider, limited overnight flow: macro 10Y fund paying.

- US$ LIBOR: No LIBOR sets due to UK bank holiday Monday.

EGB SUMMARY: It has been a very slow start to European government bond trading

with London observing August Bank Holiday and the fact that ECB Draghi did not

give anything away on likely path of its QE program at JH speech. Bund yield is

a modest 0.5bp higher relative to Friday's European close at 0.385% as Euro

remains at elevated levels vs US Dollar. 

- ECB President Draghi appeared constrained in his official speech at Jackson

Hole, but in the Q&A Draghi did say that the "recovery is proceeding" and on the

"one hand are confident that as the output gap closes inflation will continue

converging on its objective over the medium term".

 - There appeared to be a E100mln+ receiver of a 14Y Euro swap @ 1.16% at

0840BST. While there has been some selling in Bund Oct calls. 

- Italy sold E2bln in 2-yr CTZ's without any trouble, and ECB money supply data

did not impact markets. 

- EMU Periphery are having a more interesting day. Coming under a little

pressure at start of trade but then recovering and trading slightly better than

Germany following solid CTZ supply. 10-yr Spain & Italy are -1bp vs Bunds.

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

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