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     US TSYS SUMMARY: US Treasuries prices open NY mildly weaker, curves mixed
ahead of 8:30am ET US Sept. nonfarm payroll employment report, which could see
hurricane-tied distortions. MNI econ poll has a 70K median estimate. Cash
10-year note is 2.366% vs. o/night high yield of 2.371% hit at 7:46 am ET. 
- TOKYO hours saw mild Tsys bid, sideways trade, mild two-way flows into UK.
Leveraged accts sold on stronger US$ with position squaring into jobs by fast$
and prop accts. Asian banks bought 30Y bonds. China and South Korea return
Monday after week-long holiday. 
- LONDON: Better selling early as German Bunds sold heavily due to stronger
German factory orders. Flow included bank portfolio buying in 2s, ongoing
two-way in 5s, extension selling in short end/vs. 5Y buying, position squaring.
US bonds closed Monday for Columbus Day holiday. 
- US SWAPS: Steady/mixed spd curve mildly steeper amid modest two-way flow in
sub-5Y, bank receiving in 5s and paying in belly, 2-5Y flattener and small
receiver in 10y. 
- OVERNIGHT REPO: Tsy 3Y, 10Y and old 5Y, 7Y notes all tight.
GILT SUMMARY: Markets seen a little on edge ahead of key US non-farm payroll and
average weekly earnings data, with the Dec UK Gilt future initially opening
slightly higher, but then spiking lower in modest selling, only to then recover
in wake of fall in second quarter unit labour costs (ULC). Yield curve is
modestly steeper as short-end outperforms on continued UK political risks. 
- 2-yr Gilt yield is -0.7bp at 0.455%, 5-yr +0.3bp at 0.797%, 10-yr +0.5bp at
1.389% and 30-yr +0.6bp at 1.972% according to Tradeweb. 
- The short end of the yield curve rallied in the morning supported by return of
UK political risks following confirmation that there are around 30 rebel MPS
calling for UK PM May to resign. The long-end though was seen weighed by
comments from BoE Ian McCafferty -- good reason to think QE unwind could start
after "several" rate hikes, 
- Surprise jump in house prices seemed to be catalyst for a sell-off in Gilts,
which then followed Bunds sharply lower as stops got triggered. Gilts recovered,
likely on the back of ULC falling to 1.6% in Q2 from 2.4%. - Breakevens are
circa 2bp wider, while swap spreads are little changed
EGB SUMMARY: Spanish debt started on the defensive as news filtered through that
many some Catalan banks are moving their headquarters outside of Catalonia.
However, Bonos have clawed back their losses as the day has progressed and the
spread to Germany is only around 0.6bp wider today. 
- The Bund contract hit a patch of heavy selling early in the session that took
the contract from around 161.21 to 160.80. There was no obvious catalyst in the
news flow but definitely a stop-loss wave added to the move as the contract
passed through 161.00. Action was futures driven and the CTD into the RXZ7 was
the worst performer on the curve over that period. 
- the 10Y German yield is 2.4bp higher at 0.48% and the 2-10Y spread is 2bp
steeper at 117bp and the Spanish curve is steepening more rapidly. 
- Eurozone economic data have generally been strong, headlined by a
consensus-busting 3.6%M/M jump in German factory orders. 
- The US employment report is key to the final hours of trading this week but
there are also some ratings agency updates after the US close. Moody's updates
Italy and DBRS tackles the Spanish rating.
--MNI New York Bureau; tel: +1 212-669-6432; email:

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