ASIA/US/EUROPE BD/STK RECAP: TSYS OPEN NY MIXED;2WAY POST-JOBS

     US TSYS/UPDATE: Treasuries improved Friday morning amid two-way flows after

+228K November jobs report, 4.1% jobless rate, and less than expected 0.2%

average hourly earnings; market saw two-way flows.

     US TSYS SUMMARY: US Treasuries open Fri NY mixed, 2/10Y, 5/30Y curves

flatter amid reduced event risk. Tsys off lows/bid amid recent EU officials

headlines re: formal UK trade talks won't start immediately in 2018. Markets

fairly quiet into 8:30am ET Nov NFP data: MNI poll has median estimates of 200K

NFP, 194K private payrolls, 4.1% jobless rate, 0.3% AHE, 34.4 hours avg work

week. 

- TOKYO: Tsys rose and peaked overnight about midnight ET, then drifted lower

into London open; light 2-way ahead data, FX-acct selling on stronger US$.

End-users buy 2Y Tsys. Global stocks improved with Japan's Nikkei up 1.4%.

Congress extended debt limit by 2 weeks from Friday (today). 

- LONDON: Tsys pressured amid lighter risk event risk; UK and EU agree on Brexit

pact, and UK payout will be EU40-45BLN. Tsys drew early steepeners, end user

sales in intermediates. Real money bought longer TIPS. Hot money bought the

belly in butterflies. 

- Swaps, spds running mixed, mildly wider in the wings vs. tighter

intermediates, light volume going into weekend, recent 2s6s flattener ($56k

DV01), $100M payer 5s earlier at 2.20987%.

EGB SUMMARY: The Brexit negotiation has dominated a holiday-effected European

trading session. UK Gilt yields are around 6bp higher and Brexit optimism has

depressed many EGB markets. The 10Y Bund yield is +1.5bp at 0.308%, with the

curve steepening. 

- Lower quality government credits have performed strongly this morning as the

impact of the lack of new rules for the treatment of government bonds in

yesterday's Basel III announcement filters through. Governments keep their

preferential treatment and Greek debt is 20bp lower in yield today without any

domestic news. German Bund 10Y traded at 0.299% yield up 0.9 bps on the day.

- The Bund-BTP spread has hit 14 month lows with a 3.5bp compression to 135bp

and the Bund-Bonos spread has also breached 25bp. 

- German trade data for October showed a shrinkage to E18.9bln from 24.21bln as

exports shrank 0.4%M/M but imports rose 1.8%M/M. 

- Italy, Spain, Portugal and parts of Switzerland are shut today. 

- Early EUR swap flow showed curve trades were dominated by flatteners.

GILT SUMMARY: Gilts are trading sharply lower led by the 10-yr part of the yield

curve following breakthrough in Brexit negotiations that is likely to see the 27

leaders of the EU approve 'sufficient progress' has been made next week,

allowing talks to move onto phase 2 -- a 2-yr transitional deal and future trade

agreement. 

- 10-yr Gilt yield is 4.5 bps higher at 1.297. 

- Before opening of EU/LDN markets EU President Juncker announced a breakthrough

on Brexit talks and the EU will recommend "sufficient progress" has been made.

While PM May said that the "hard won agreement" was in everyone's interests and

that a specific solution had been found for Northern Ireland. 

- However the devil is in the detail of the agreement and the DUP have already

said that it could vote against the final Brexit deal. 

- UK data was mixed and had little impact on markets who's attention is now of

US non-farm payroll data. Breakevens are tighter led by -3.7bp in 5-yr, while

swap spreads are tighter led by the -2.9bp in 2-yr.

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

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