ASIA/US/EUROPE BOND & STOCK RECAP: TSYS OPEN WEAKER INTO JOBS

     US TSYS SUMMARY: US Treasuries open NY Friday mainly slightly weaker, 30Y

mildly firm into 8:30am ET key US Oct. jobs report, after a tight overnight

range. MNI econ poll had +315K Oct jobs median estmate, a 4.2% jobless rate and

0.2 Avg Hrly Earnings; was 280K whisper on BBG. 

- TOKYO: Quiet start/low volume with Japan mkt closed for Culture Day. Sideways

trade with mild bid for 30Y bond and Ultras into the London open. - LONDON: Tsys

reopened and trade in narrow band w/mild bid behind German Bunds after mild

midmorning chop. EGBs drift. UK Services PMI drew a 55.6 reading vs 53.3

expected. Light selling in Tsy front end to intermediates. Tsy futures: 7:28am

ET block sale of 5,000 TYZ 10Y futures and 1,500 USZ Long Bd futures sale at

7;13am. 

- US SWAPS: Spds steady/narrowly mixed, quiet into wkd/next wk 3/10/30Y

auctions. - OVERNIGHT REPO: Tsy 3- and 10Y notes tight. 

- EURODLR FUTURES: Mildly weaker, low end of range, light volume. 

- US HIGH-GRADE CORPORATE BOND ISSUANCE: Nothing Friday.

EGB SUMMARY: Trading was choppy in the 10Y German Bund this morning with an

initial decline in yield as the 10Y Bund market appeared to follow the 10Y Gilt

lower. Talk of a weak Chinese Caixin PMI release also sparked some interest. 

- Yet, this rally evaporated soon after a speech by the ECB's Nowotny. Even

though the speech sounded mostly dovish, saying it was too early to discuss an

end date for QE he also spoke up the European economy. 

- The main movement of the day is visible in the Italian market with BTPs

outperforming, mainly in the front end of the curve. However, the spread

tightening enticed someone to take some profits on Italy and around 1030GMT,

there was a block RX vs IK (selling BTPs). 

- Irish debt markets remain largely unaffected by the announcement of US House

Republican tax plan. The 10Y Irish bond is slightly outperforming today with the

yield down 1bp. 

- The Bund-Treasury spread is also a large mover today as Treasuries weakened

early and the 10Y spread widened 2bpt to 199.5bp, although this has faded. The

Bund yield is currently 0.7bp lower at 0.365%.

GILT SUMMARY: UK Gilts are trading mixed with the short-end seen weighed by

better than expected UK service PMI data, while the remainder of the curve,

especially the 10-year part continues to find support from Thursday BoE "dovish

rate hike". 

- Some analysts see the markets over reacting to the decision and subsequent

dovish interpretation of the MPC minutes and quarterly inflation report and see

risk that rates could rise for a second time in Q2 2018 compared to current

market pricing of Q4 2018. 

- BoE Broadbent was on BBC radio 4 this morning and said that he thought rates

would need to rise 2 more times to get inflation back on track, supporting the

consensus view on the MPC, however sounded cautious on UK's economic outlook. 

- A surprise rise in UK Oct service PMI to 55.6 from 53.6 seen in Sep had a

large impact on the short-end of the curve with yields rising over 3bps. 

- 30-yr breakevens are nearly 1bp tighter while swap spreads are little changed

with the exception of the 2-yr which is 1.9bp tighter.

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

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