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

     US TSYS SUMMARY: Treasuries short end and intermediate prices opened Monday

NY mildly higher, while 10Y traded roughly flat on the day but off 6:18am ET

price lows (98-23/32, 2.390% yield). US stocks futures are mildly higher. No

economic data today but Tsy sells $42B 3m bill auction and $36B 6m bill auction

at 11:30am ET; Tsy also sells 2/5/7Y auctions this week and 2Y FRN too. 

- TOKYO: Tsys began mildly weaker, as Japan PM Abe held 2/3 majority in lower

house election. Selling occurred in 10Y Tsy futures and cash 5Ys, while real$

bought 2Y, 10Y notes. FX-tied selling as US$ rose vs. yen. 

- LONDON: Flows turned more mixed, with futures have early buys and

short-covering in long end. Real money sold 10Ys, bank portfolios did two-way

flows vs. credit tied sales in belly. Asian central banks and UK asset managers

bought Tsys. Insurers bought 30Ys. US$ remains firmer. 

- US SWAPS: Spreads mixed, spread curve flatter; prop rate receiving in

intermediates, recent 6Y receiving at 2.17%. 

- CORPORATE BONDS: Quiet action Monday, but Citi to do benchmark 5Y/FRN and

11Y/NC10; others ramp up issuance for the week; CPPIB 10Y Tues.

GILT SUMMARY: The 10Y gilt yields have been trading sideways after an initial

push upwards early in the morning. Although the front of the yield curve has

come under higher pressure in turn bear flattening the yield curve. 

- 10-yr Gilt yield is -1.3 bps at 1.318%. . 

- In terms of data release, there was CBI Trends Total Orders, which game in at

an extremely poor level of -2. The survey is consistent with a picture of

relatively subdued UK growth with elevated inflation, however, there was muted

reaction from the gilts. 

- On the Brexit front, there has been a push from business groups calling for a

transition deal to be agreed upon 'as soon as possible' according to the FT. 

- UK breakevens are currently trading about 1.1bp tighter and swap spreads are

mixed with 2Y currently with 1.5bp wider while the 15Y is 1.5bp tighter. 

- PM May is due to give an update to MPs on the EU Summit from about 1530BST,

which is likely to concentrate on Brexit.

EGB SUMMARY: The Bund yield opened around 1.5bp lower at 0.435% and it has

approximately stuck there though the session, as it is around -1.9 bps lower at

0.432% by 9:32am ET.  

- Weekend political news in Spain/Italy failed to hurt Spanish or Italian debt

on Monday. This morning Catalonia announced that it would hold a Parliamentary

session on Thursday, one day ahead of the Central government Senate decision on

Art. 155. 

- There have been some strong flows in the periphery with several hundreds of

millions of buying reported mid-morning. However, this could have been hedging

of a Bund-BTP block trade that showed up in the futures market (2,543 IKZ7 @

137.08 vs 2,148 RXZ7 @ 161.55 at 1004BST). In a brief period around this flow,

the Bund-BTP spread ratcheted in from 160bp to 156bp. 

- Belgium conducted a 6Y, 9Y and 30Y auction that met with solid, if not

exceptional demand. The 6Y appeared strongest. 

- Much talk of the massive French redemptions/coupon on Wednesday. At least

today, there is no obvious impact upon short-maturity OATs.

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

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