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

     US TSYS SUMMARY: US Treasuries open NY higher, 5Y and 7Y notes

outperforming as US market players return to work after Monday Columbus Day

holiday; Canada markets also return after Canada Thanksgiving Mon. 

- TOKYO saw foreign central bank buying in the Tsys long end. Asian banks bought

5Y and 10Y notes. Dealers sold 10Y notes to prepare for 3/10/30Y auctions that

begin with 3Y and 10Y auctions Wed. Meanwhile Japanese accounts paid in US long

end swaps. China also has returned after last week's holiday week. 

- LONDON: Tsys aided by Spain/Catalan worries. End-users bought 2Y notes. Tsy

futures had a block trade of 10Y Ultra for 3,029 done at 134-02 at 5:45am ET;

not clear if was a buy or a sell. 

- US SWAPS: Running steady/mixed, mild two-way flows in 5Y, 10Y. 

- US EURODLR FUTURES: Modestly higher, flatter. 

- US HIGH-GRADE CORPS/SOVS: Heavy issuance Tues eyed: Northrup Grumman

3/5/7/10/30Y, and Broadcom 3/5/7/10y among others; Quatar to do $9.0B in

international bonds, no time set yet; Wed to bring $3.0B EIB 5Y note. 

- COMMODITIES: NYMEX crude oil traded up 1.17% at $50.16.

GILT SUMMARY: Gilts are trading lower, however the front end is underperforming

and therefore bear flattening the yield curve despite disappointing 20-year Gilt

re-opening auction as industrial production surprises to the upside. 

- 10-yr Gilt yield is +3.1 bps at 1.386%.

- Gilts opened lower, but slowing pared losses taking cue from recovery in

German Bunds. Dec Gilt future held near top of days range following mixed data

as IP showed large upward revisions thanks to robust manufacturing and

construction surprise to the upside as well. Net trade deficit widen sharply,

however, which is likely to exert a negative force on Q3 GDP. 

- The future dropped sharply and ticked to fresh intra-day low though, as

20-year Gilt re-opening auction tailed badly (0.4bp vs 0.2bp) which lead to a

block sell in G Z7 for 1k, and a number of basis trades. 

- Swap spreads and 5-yr and 10-yr breakevens are little changed, but 30-yr

breakevens are 1bp wider at 3.485%.

EGB SUMMARY: Bunds traded weaker by 9:25am ET. Earlier the yield on the 10-year

Bund remains largely unchanged despite the political uncertainty in Spain. 

- The Catalan regional government president Carles Puigdemont was initially due

to address the Catalan parliament in the evening today. However, sources claim

that the Catalan president will hold a press conference at 1200BST. It is still

uncertain whether the Catalan president will declare independence at this

session. The Spanish Prime Minister Mariano Rajoy has threatened to jail the

Catalan president if he goes ahead with the declaration of independence. 

- The Bund-Bonos spread is trading approximately +1.5bp higher. 

- The tensions in Spain have pushed the 10-year Italian BTP yields higher by

+1bp and the Italian government yield curve appears to steepening on the day.

The spread between the BTP-Bonos 10-year bonds is also higher today

approximately +2.4bp. 

- In Germany, E1bln 7-Year linker 0.10% Apr 2026 Bundei was auctioned today.

Finland sol E1bln of Apr-22 with modest demand and Slovakia sold E1bln 30Y via

syndication.

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

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