ASIA/US/EUROPE BOND & STOCK RECAP: TSYS EBB LOWER

     US TSYS SUMMARY: US Treasuries prices open NY mildly weaker, 30Y unchanged

after overnight mixed flows and relatively quiet range trade. 

- TOKYO: Tsys saw brief higher prices after Fri CPI-inspired rally, then better

selling in cash 10Y, futures after Fed Chair Yellen said soft inflation readings

won't persist, gradual rate hikes warranted. Asian selling occurred in US 10Y,

30Ys, while foreign central banks did mixed flows in 5Y, 7Y. Japanese bank

buying occurred in 7Y notes. - LONDON: Tays had a fairly tight range, two-way

flows, real money selling in 10Y notes. Then some long end buying recently. Also

flows had misc acct buying in 3Ys, mild FX account buying in 10Ys, bank buying

in 5Y, 10Ys. MNI's Jean Yung recently had Main Wire exclusive story from Boston

Fed Rosengren saying he favored quarterly US interest rate hikes. 

- US SWAPS: Mildly tighter, spread curve steeper. 

- US CORPS/SOVS: Mon BPCE 10Y note; Tues to have IFC $1.0B 5Y green note; could

be bank debt this week too. China US$2B in 5Y, 10Ys US debt Thu Oct. 26th; first

US$ debt sale since 2004. 

- EURODLR FUTURES: Steady to mixed, Golds mildly higher. 

- OVERNIGHT REPO: Tsy 5Y, old 3Y, 1m Bills all tight.

EGB SUMMARY: German Bunds improve: German 10Y Bund yield is lower by 1.8bp this

morning at 9:37am ET and is currently trading at 0.382%. The Dec-17 Bund

contract is higher today with the only significant price resistance appearing at

the 162.99 level, which is the 100 day weighted moving average. 

- The Catalan President Carles Puigdemont did not provide any clarity as

demanded by the Spanish PM Rajoy on if he had declared independence. Instead,

Puigdemont is pushing for talks between the Central Spanish government and the

Catalan Regional government. There is little change in the Bund-Bonos spread at

the moment with it trading at 120.6bp. 

- The BTP-Bund spread is tighter by 2bp and is currently trading at 166.3bp,

with heavy buying in the 7-10Y area. - In terms of upcoming speakers ECB's

Lautenschlaeger speaking at 1900BST. 

- Around mid-morning, we noted a large (at least 194k DV01) EUR 3-10Y swap

steepener trade being done.

GILT SUMMARY: Gilts have bounced off opening lows but still remain in negative

territory as markets build up some hope of the deadlock in Brexit negotiations

are unhinged slightly as PM May and Brexit secretary Davies travel to Brussels

to meet Juncker and Barnier. 

- Markets also are positioning into key inflation data and comments from BoE

Governor Mark Carney at Treasury select committee on Tuesday, and latest UK

labour report on Wednesday. 

- UK 10Y Gilt tield was at 1.347%, 1.9 bps lower on the day at 9:38am ET. 

-  Gilts opened sharply lower with the 10-yr Gilt rising by over 4bp at one

stage, weighed by overnight move lower in US Treasuries and as markets had first

chance to react to BoE Carney comments late Friday -- "we are running out of

that spare capacity and that tolerance for having inflation over target", and

news that May and Davies were travelling to Brussels.

- Majority of swap spreads are tighter with the 15-yr seen leading the way at

-1.5bp, while 10-yr & 30-yr breakevens are 0.6bp wider.

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

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