ASIA/US/EUROPE BOND & STOCK RECAP: TSYS SEE BEAR FLATTENING

     US TSYS SUMMARY: US Treasuries have a bear flattening going on, with 30Y

well outperforming the shorter maturities amid flatteners in the 2/30y, 2/10Y

and 2/5Y and also 5/30Y and 5/10Y curves into today's 11:30am ET US 2Y note

auction and 1pm ET 5Y auction. Tsys also aided most recently by softer US$/yen

and by firming German Bunds. NYMEX oil weaker.

 - TOKYO: Tsys began steady/weaker with 10-yr note clinging to a 2/32 range

until drifted lower into UK session. Two-way trading occurred in fronts to

intermediates, while Asian accts sold 10Y notes, and end user sold long end.

Asian stocks declined: Japan's Nikkei stock index ended off 0.25%, while China

stock indexes declined across the board, continuing the recent choppy trend. Mkt

traders eyed rumors of an early withdrawal of BOJ stimulus. 

- LONDON: Tsys drifted lower until the day's low hit about 5am ET, amid bear

flatteners, while fast$ and specs did mixed flows in 5s and 10s. More recent bid

in long end likely following German Bund lead. Large 22.9k TYH Block 124-24

helped move to upside. 

- US SWAPS: Mildly tighter. 

- US EURODLR FUTURES: Whites/Reds mildly weaker; firmer LIBOR rates. 

- US HIGH-GRADE CORPORATE BONDS: Heavy issuance expected this week and next week

too; today brings UBS AG/Ldn 18M FRN/3Y/3Y FRN and Orix 7Y benchmark note.

Alibaba Grp Hldg sets investor calls Nov. 27-28 ahead of expect US$5B-$7B bond

deal. 

- OVERNIGHT REPO: Tsy 5Y note remains tight; 2Y, 7Y, 10Y mildly bid.

GILT SUMMARY: Gilts improved after earlier trading steady to slightly lower

ahead of NY session, with little data seen to direct markets. Yield curve is

ever so slightly steeper as the long-end underperforms. 

- UK 10-yr Gilt yield is -0.2 bps at 1.246. 

- Gilts open slightly higher, more than likely on the back of Brexit uncertainty

as EU President Tusk said it will be an uphill struggle for the UK to meet

'enough progress' to move talks onto the next stage with the Irish boarder being

a particular contentious issue. 

- 30-yr breakeven rate widened quickly this morning as last weeks tightening

move, supported by large IL Gilt redemption and coupon payments, faded. However

they have seen given up some of the widening move to now be +0.9bp at 3.437%. 

- Meanwhile swap spreads are modestly tighter across the board with the 15-yr

seen leading the move. 

- Markets might see some reaction to BoE Haldane comments this afternoon as he

makes a speech on education and communication strategy at 1430GMT

EGB SUMMARY: German  Bunds have improved. EGB markets earlier demonstrated some

fairly random movements today: the Bund contract shot up from the getgo to

163.05, falling to 162.76 and then rallying again to just above 163.00. 

- Early on, the biggest flows were in the Schatz contract and we have noted some

good and consistent paying flows in the 2Y and 5Y tenors of the EUR swap curve.

- Economic data has been limited to the Italian November economic sentiment

index, which came in weak at 108.8 from 109.1. 

- Italian paper has been well bid and the Bund-BTP spread is 2.4bp tighter at

142.7bp. Portuguese paper is also tightening but Spanish debt is lagging a

little. With the Catalan election on Dec 21, there is an understandable

reticence while fresh polls point to a Parliament with no overall control. Irish

debt is stable despite a strong possibility of government collapse. 

- The German 10Y yield is -1.2 bps at 0.346% Monday. Volumes are not impressive.

- Last week saw short-dated German paper underperform swaps quite considerably

but this weakness is not evident today.

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

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