ASIA/US/EUROPE BOND & ST RECAP: TSYS SOFTER: O/NIGHT 2WAY FLOW

     US TSYS SUMMARY: Treasuries opened NY weaker after muted overnight 2way

trading flows. Tsys lifted off the overnight lows starting about 6:30am ET when

10Y note was at 99-03+ price, 2.352% session high yield. 

- TOKYO: Tsys reopened after Thu US Thanksgiving holiday. Foreign central banks

sold Tsys 5Y note, commercial banks sold 5Y, 10Ys. That could be selling to

clear the decks to buy the new 5Y note auction next Mon; both 2Y, 5Y auctions

occur Mon, 7Y Wed. Jpn MOF: Jpn investors bought net Y231.3B in foreign bonds

and net Y330.9B in foreign equites and Y8.9B in foreign money mkt instruments.

Chinese stocks stabilized Fri after Thu selloff. 

- LONDON: Tsys and EGBS pressured as German IFO hit a record high and Germany's

SPD party said willing to hold talks with PM Merkel. European stocks mainly

higher, except UK. Bloomberg said Russia, OPEC eyed a deal to extend production

cuts. Next Thu is OPEC production meeting in Vienna. 

- US SWAPS: Mostly wider, except 5Y (tigther); thin flows. 

- US$ LIBOR: 1m (1.3376%), 3m (1.4676%), 6m (1.6539%) all higher; 

- US CORPS: No issuance Friday; will be heavy next week though.

GILT SUMMARY: Gilts opened lower and have pretty much stayed there since with

little seen to move them out of their morning stupor. 2-yr to 10-yr part of the

yield curve is weighed the most with 10s/30s 0.8bp tighter 

- 10Y Gilt yield is +1.5 bp at 1.262%. 

- Gilts seen pressured by more optimistic comments from EU Juncker that there is

some progress being made on Brexit negotiations, but will need to see by Dec 4

if enough progress has been made to move talks onto the next stage. 

- There was a small drop in the number of mortgage approvals in October compared

to September, however re-mortgage approvals more than made up for the short

fall. 

- Flow wise it has been very quiet with the exception of Gilt future calendar

roll that has jumped into life today with over 160k block and a further 65k

traded on screen. 

- Swap spreads are little changed with exception of 2-yr which is 1.7bp tighter,

while 5-yr & 10-yr breakevens are 1bp wider, but 30-yr unchanged

EGB SUMMARY: On Friday, price action has appeared quite random at times in the

EGB space. 

- The big move occurred as the German IFO index surprised to the upside and hit

an all-time high, although the Bund contract looked like someone had pulled the

rug from under it 10 minutes before the release. Even before this, small selling

in the 10Y area of the semi-core was dragging French/Dutch/Belgian yield higher.

- Irish debt also suffered from a developing political stand-off but early

selling appears to have subsided as markets realise that fresh elections will

unlikely create any market-unfriendly outcomes. 

- The Bund contract dropped to a 162.67 before buying materialised and without

any news, quickly propelled the contract to 162.94 before the rally ran out of

legs. 

- In the background, there has been a slow drip of German political headlines

and it looks as if next week the SDP and CDU/CSU will talk about either a formal

coalition or provision of support for a minority government. 

- There is an early US bond market close today.

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

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