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

     US TSYS SUMMARY: US Treasuries open NY firmer, 2/10Y and 5/30Y curves

flatter after overnight range-trade then gain starting about 3am ET. There is no

major morning data nor Fed speakers today. 

- TOKYO: Tsys saw some mild risk off buying as US and South Korea began ten days

of military drills; N.Korea not happy but so far, only rhetoric saber-rattling

against such drills. Asian banks bought US 10Y notes. Japanese Nikkei stock

index ended down 0.4% amid firmer Japanese yen; gold also rose. 

- LONDON: London saw EGBS improve aiding Tsys. End users did receiving in 2-year

US swaps, while banks meanwhile did long end receiving in 10Y, 30Y swaps.

European stock indices now traded narrowly mixed. 

- WSJ said ECB Draghi could unveil QE taper at Jackson Hole conference Friday;

that conflicts with prior reports that said he would not unveil any new policy

changes at that time. 

- US President Trump tonight at 9pm ET will unveil latest military strategy on

Afghanistan. 

- Traders await details on a recent French incident in Marseille where a van hit

on purpose two bus stops; follows terror attacks last week in Spain. 

- US SWAPS: Mostly steady, short end tighter though. 

- US HIGH-GRADE CORPORATE BONDS: Nothing firmly set yet Monday.

US DOLLAR LIBOR: *** Latest settles: 

* 1-month +0.00056 at 1.23556% 

* 3-month -0.00028 at 1.31444% 

* 6-month unchanged at 1.45639%

EGB SUMMARY: The European debt markets are squeaking higher in fairly low

volumes today. The buying began at the start of European trading as the market

was picking itself off from a late drop in US trading. 

- The Bund yield is 1bp lower at 0.403% but the peripheral markets are

performing stronger still. Late Friday's Fitch Ratings upgrade to the Greek

rating has bestowed little benefit to GGBs but Portuguese yields are 4bp lower

at 10Y today. Italian and Spanish paper are also strong. 

- There was some chatter about the WSJ article that claimed that Draghi would

announce the end of QE at Jackson Hole. However, the market has yet to really

react to the report, which contained no fresh source. 

- There appears to have been some 2-4Y flattener trades in the EUR swap curve

this morning and the belly of the swap curve is performing well compared to

German and other semi-core paper. - There has been no important data and the US

calendar is empty enough that the solar eclipse can be watched at leisure.

- EU swaps saw a large 2-4Y swap trade has just gone through. E200mln+ of 4Y

swap versus E390mln+ 2Y swap. Trade done close to mids. 

- The 2-4Y curve has flattened marginally in the aftermath.

GILT SUMMARY: UK Gilts prices are modestly higher with the yield curve

flattening having reversed opening losses, supported by block buy in Gilt

futures. 

- UK 10Y Gilt is -2.9 bps at 1.058%, 131.007 at 8:41am ET. 

- Sep Gilt future opened lower taking cue from fall in US Treasuries after

London close on Friday, but quickly pared losses as markets digested weekend

press reports of the state of Brexit negotiations. 

- UK's Brexit Secretary David Davis tried to convince Brussels to hold trade

talks alongside withdrawal talks, however, there seemed to a rebuttal from some

leaders in Europe that enough progress has not been on the 3 core issues to even

consider starting trade talks. 

- Second round of UK/EU Brexit talks are due to start next week and with the UK

expected to release a number of papers this week, they are hoping negotiations

can progress at a faster rate. 

- Markets though are subdued ahead of key Jackson Hole conference scheduled for

later this week.

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

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