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

     US TSYS SUMMARY UPDATE: Treasuries drifted off opening highs after +135,000

Sept. ADP private employment report. Cash 10-year note is at 2.319% vs. 2.301%

at 7:54am ET, the session low yield.

US TSYS SUMMARY: US Treasuries open NY firmer after overnight flows tilted

toward buying following Tuesday NY gains. Next up 8:15am ET US Sept. ADP private

payrolls. Fed VC Fischer said on BBG TV that "low rates have encouraged

employment." News reports said Pres. Trump hs short list of four Fed Chair

candidates, including current Chair Yellen 

- TOKYO: Tsys had carryover bid, curve unwinding portion recent steepening.

Sources reported buying in cash 5s and 10s, real$ buying cash 7s and 10s as well

as 10yr futures w/buy stops triggered, FX-tied buying amid weak US$/yen. Asian

banks sold 5s. 

- LONDON: Further Tsys buying tempered light selling on Bund weakness. Sources

noted foreign central bank buying 2s and 3s. 

- US SWAPS: Steady/mixed, spread curve flatter. 

- US EURODLR FUTURES: Firmer across strip; recent buying in Mar'18 at 98.395. 

- US CORPS: Quieter; Bank of Nova Scotia perpetual/NC5 fixed to floating to go

Wed.

GILT SUMMARY: Gilts are trading modestly higher into NY open Wednesday supported

by risk-off sentiment on Catalonia concerns, however are off session best levels

following higher than expected UK service PMI. The 10-year Gilt yield was at

1.355%, up 0.5 bps.

- Gilts opened strongly on the back of more higher in US Treasuries following

dovish reaction to newswire reports of a short list for the Fed Chair position

being handed to US President Trump, which did not included Yellen. Continued

tension in Catalonia also provided bid in Gilts. 

- Gilts faded gains on light thin trade ahead of UK service PMI and then ticked

into negative territory when the number surprised to the upside. However dip

buying and recovery in German Bunds following decent 10-yr auction helped Gilts

recover about half its earlier gains. 

- Swap spreads are tighter except for the 2-yr, while breakevens are around

1.0bp wider.

EGB SUMMARY: The Bund 10-year yield is back near its intra-day lows of 0.428%

currently trading at 0.431% supported by continued concerns in Catalonia and

decent 10-year Bund auction. 

- The spread between the Bund-Bonos 10-year is trading near its April highs at

133.3bp, pushed wider on the day as a result of the tensions in Catalonia. 

- The Catalonian leader is due to speak at 20:00 BST. The EU has refused to step

into the matter saying that it was an internal issue of Spain. 

- The final service PMI ticked higher compared to flash estimate retail sales in

August fell to -0.5%m/m. Germany received 1.6 times cover in its 10-year

auction. While Ireland has seen good demand in its new 5-year benchmark

syndicated deal. 

- DBRS provides a positive long-term outlook for Portuguese public debt in a

newly published commentary. 

- In central bank news, Mario Draghi will be speaking from Frankfurt later in

the day and Janet Yellen will deliver remarks at an event hosted by the St.

Louis Fed.

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

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