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

     US TSYS SUMMARY: Treasuries opened NY mildly higher amid leftover bid, 10Y

2.185% after mkt peaked at 4:58am ET (10Y 2.182% yld) after ebbing earlier, to

2am ET high yield of 2.206%. US stock index futures traded mildly higher after

Thu risk-off stock selling/Tsys buying after ISIS terror attack on Spain that

killed 13, and US political uncertainty. Tsys may remain bid into the weekend

amid various geopolitical event risks.

- TOKYO: Tsys carry-over safe-haven bid after terror attacks in Barcelona,

Spain. Bid ebbed w/Asian central banks and real$ active sellers in the

intermediates. N.Korea could move back into focus as US, S.Korea scheduled to do

major military drills next week. China housing market continued to cool in July

amid restrictions in overheated property sector. 

- LONDON: Early gains then some profit-taking around 5am ET amid fast money and

credit-tied accounts selling. However active foreign central bank buying in 5Y,

10Ys helped Tsys rebound before bank portfolio sales in 5Y, 30Ys. 

- US SWAPS: Spreads ran tighter. 

- O/N RP: Tsy 2Y negative rate, 5Y tighter. 

- US EURODLR FUTURES: Mildly higher, midrange. 

- US HIGH-GRADE CORPORATE BONDS: Nothing Friday.

EGB SUMMARY: EGBs have performed strongly throughout the day, with the exception

of some pre-weekend profit-taking in the past half an hour. 

- There is a preference for German debt today in the EGB space and the 10-Year

Bund yield has outperformed the Italian/Spanish/Portuguese triumvirate by around

1-2bp. The swap curve is also underperforming Germany. 

- Bund futures volumes are approximately in line with the 10 day average. 

- One notable trade this morning was a 24.5k DUU7 vs 8.2k OEU7 flattener trade

that went through mid-morning. As a result, there has been a decent flattening

between the CTDs into the respective contracts. 

- German PPI data rose by a better-then-expected 2.3%Y/Y but otherwise, data has

been thin on the ground. 

- The upside for the Bund is also seen as limited by a technical quagmire in the

Treasury note future that sits between current levels at 127-00. 

- Currently, the Bund yield sits 1.3bp lower on Friday at 0.412%, with the curve

flatter by around 1bp.

GILT SUMMARY: Gilts currently holding onto opening gains with the yield curve

bull flattening as the long-end seen supported by flight-to-quality bid in wake

of latest terrorist attack and US political concerns. 

- 2-yr Gilt yield is -0.5bp at 0.225%, 5-yr -0.6bp at 0.499%, 10-yr -1.4bp at

1.080% and 30-yr -1.1bp at 1.748% according to Tradeweb. 

- Gilts opened Friday modestly higher, as markets traded with a mild risk-off

tone following terrorist attack in Barcelona, continued concerns over the

ability of the Trump administration and further dovish comments from Fed

officials. 

- Saying that though, Gilts did temporarily pare some of their opening gains as

traders looked to take some profits, but with limited new data from UK &

Eurozone, prices ticked higher once more, taking cue from large 2-yr/5-yr curve

flattener trade in German Bonds. Prices once gain dropped from highs but in very

light volume. 

- Swap spreads are mixed with 2-yr 2bp tighter while 10-yr is 1bp wider. While

10-yr and 30-yr breakevens are circa 1bp tighter.

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

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