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

     US TSYS SUMMARY: Treasuries opened NY firmer, flatter after overnight mixed

flows. That followed Mon decline (except 30Y) amid heavy US$ high-grade

corporate bond issuance and weaker German Bunds. 

- TOKYO: Treasuries declined early amid strong Australian business confidence,

but then drew some demand as Asian banks bought 2Y and 5Y notes while Asian real

money bough 5Y, 10Y notes. Also accounts bought the long end but sold the belly;

mkt improved into UK session. China had weaker than expected retail sales. China

10Y govt bond yield hit over 4% for first time in three years. 

- LONDON: Tsys and rates had carryover bid, long end outperforming. Bank and

prop accts buying occurred in 30Y bonds, while real$ sold 5Ys. Others did cash

Tsy flatteners. 

- US SWAPS: Sprds mixed, curve steeper. Scattered receivers, mixed curve flows,

RV accts did flatteners, with recent 10/20Y steepeners. 

- OVERNIGHT REPO: Old 3Y notes again had demand; 3/10/30Y auctions settled Wed

11/15. 

- US HIGH-GRADE CORPORATE BONDS:Wld Bk 10Y, Freddie Mac 3Y Reference Note.

GILT SUMMARY: Gilts are trading steady to higher with the yield curve bull

steepening as the short-end outperforms following softer than expected UK

October inflation data. 

- UK CPI came unchanged for October at 3.0% y/y, below consensus and BoE

forecasts for a tick higher to 3.1% y/y. While core CPI also remained unchanged

at 2.7% y/y. Numbers signal that inflation might have peaked and could slip

lower from here as input price inflation hits lowest since July 2016. 

- UK 10-yr Gilt yield is -0.4 bps at 1.323%. 

- Gilts opened lower and extended losses ahead of UK inflation data as the Uk

government appear to cave into Tory rebels and the opposition Labour party when

David Davis announced there will be a vote on the final Brexit deal, however it

pretty much is a 'take-it-or-leave-it' vote as UK will still leave the EU. 

- There were no surprising comments from BOE Governor Carney at the ECB panel

discussion on central bank communication. 

- 5-yr & 10-yr Breakevens are 3bp tighter while swap spreads are little changed

EGB SUMMARY: The much-awaited ECB panel with Draghi, Yellen, Carney and Kuroda

has been disappointing in terms of monetary policy information, even if

sometimes entertaining. However, EGB yields are generally lower on the session

with the Bund yield down 0.9bp to 0.408%. 

- Today's star performers have been the Iberian markets, taking over the baton

from a good performance by BTPs earlier on in the session. The Bund-Bonos spread

is 1.8bp tighter at 108bp. The Bund-PGB spread is 4bp tighter at 153bp, helped

by a Rabobank piece looking to the Fitch rating decision on Portugal. 

- Dutch 10Y and German 2Y auctions were smoothly executed and the new Schatz

picked up some decent bidding, when newly-introduced German 2Y paper can often

be technically uncovered. 

- The flash Eurozone GDP release came in line with expectations (and preliminary

flash GDP) at 0.6% Q/Q. Spanish CPI was also released and the core measure

surprised to the downside at 0.9%Y/Y. Finally, German ZEW for November saw

current conditions beat consensus at 88.8, the highest since 2011.

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

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