ASIA/US/EUROPE BOND & STOCK RECAP: TSYS BEGAN NY HIGHER

     US TSYS SUMMARY: US Treasuries open NY higher, bolstered recently as UK

Gilts gained as BOE Carney comments on Reuters that "building war chest in

interest rates for future shocks would not be in-line with inflation target." 

- TOKYO: Tsys saw some selling by misc accts in5Y, 10Y and better selling in

10Y, 30Y into UK crossover. Some jitters remain on view that Pres. Trump may

chose John Taylor as Fed Chair, which would push US rates upward, said traders.

But Tsys also had some mild bid amid US/N.Korea tensions. 

- LONDON: Tsys saw two-way flows amd mild chop, misc 3Y buying, macro fund

buying in 5Y notes, selling in 10Ys. End users sold lg end. Some did 5/30Y

flatteners. Tsys also saw 7:58am ET block trade, 5,000 TYZ 125-15.5 crossed on

bid at post time. Nominal Tsys outperform TIPS. 

- US SWAPS: Overnight macro fund paying in US intermediate swaps. 

- OVERNIGHT REPO: Bid in current Tsy 5s, old 2Y, old 3Y, old 5Y, old 5Y. 

- EURODLR FUTURES: Small bid Mar8-Mar9. Recent heavy 1-yr midcurve Eurodlr puts

buying: 105,400 short Dec 78 puts. 

- US CORPS: Tues IFC $1.0B green 5Y, NWB $500M lg 2Y FRN, CADES benchmark 2Y.

EGB SUMMARY: - The 10Y Bund yield is trading lower 0.5bp at 0.368%, continuing

the rally that began following reports that the ECB was honing in upon a nine

month extension to QE. 

- Final EMU headline inflation data came in stable at 1.5% whereas the core

reading weakened a further 6bp relative to August at 1.12%. In other data, from

the Eurozone the German ZEW Economic sentiment (Oct) came in at 17.6 versus a

figure of 17.0 in September. However, this was lower than the MNI forecast level

of 23.0. 

- In the peripheral markets, the spread on the Bund-BTP is tighter today and

currently trading at 165.2bp, bouncing from a low of 163.8bp. Sources reported

massive buying in the MTS platform in the 7Y area this morning. 

- The Bund-Bonos spread is also trading 0.6bp tighter today, currently trading

at 120.1bp - In supply news, in a poor auction, Germany auctioned E3.22bln of

the 0% Sep-19 Schatz today at an average yield of -0.75% and a bid-to-cover

ratio of 1.3x. 

- Additionally, KfW issued E3bln of a 5Y at mid swaps -34bp.

GILT SUMMARY: UK Gilts are trading little changed ahead of NY open, having

reversed earlier soft opening as UK September inflation comes in-line with

expectations and BoE's David Ramsden and Silvana Tenreyro appear in front of

Treasury Select Committee. 

- UK 10-yr note yield 1.276%, yield 5.7 bps lower. 

- UK inflation for September came in at 3.0% y/y, a 5-year high, in-line with

MNI median forecast and up from 2.9% y/y in Aug. This was above BOE's staff

forecast of 2.8% y/y in its Aug QIR. While Core remained steady at 2.7% y/y as

expected. 

- BoE Ramsden sounded dovish as he answered questions from the TSC, saying that

he was not in the majority who thought interest rates should rise in 'coming

months'. However, BoE Tenreyro when asked the same question said she was with

the majority of the MPC. 

- Swap spreads are modestly tighter led by the long-end, while breakevens are in

the region of 1bp tighter.

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

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