ASIA/US/EUROPE BOND & STOCK RECAP: TSYS WEAK AS RISK-ON BACK

     US TSYS SUMMARY: Treasuries had a gap opening lower overnight after risk-on

mood arose as N.Korea did not fire ICBM missile, and Hurricane Irma weakens to

Category 1, i.e., less dangerous. US stock index futures and EU stocks gained. 

- TOKYO: Tsys slid early on reduced risk factors, and fast money sold amid mild

2-way flows. Prop acct buying arose in 2Y, 5Y while foreign central bank buying

occurred in 10Ys. Mild Japanese bank bid in short end. Nikke stock index +1.4%. 

- LONDON: EGBs and Tsys declined while sovereign EGBs tightened vs. German

Bunds. Real money sold 7Y, 10Y Tsys, with risk-off unwinds by fast$, props, and

light deal-tied sales; other selling in 30Y Tsys. UK Parliament to vote on EU

Withdrawal Act late Monday. 

- US SWAPS: Tighter, spread curve steeper. Real money overnight did some 5/5Y

receiving. 

- US EURODLRS: Weaker across strip amid heavy sales in short end Sep'17

including -85K from 7:15-7:45am ET roughly at 98.685-.687. - OVERNIGHT REPO; US

3Y, 5Y, 10Y tight;3Y,10Y bid on pre-auction shorts. 

- US HIGH-GRADE CORPORATES: Mon: BOC Aviation $500M 5Y and $500M 10Y; Sumitomo

Mitsui benchmark 2Y fixed, 2Y FRN and Mitsubishi UFJ Lease & Finance to do $500M

5Y; Tues: Finland $1.0B 3Y note MS-3s via CAC, JPM, NOM, NORDEA.

GILT SUMMARY: UK Gilts remain under pressure going into NY session, however

markets have been rather subdued and have traded in a tight range due to lack of

direction seen from both UK and Europe. The 5-yr part of the yield curve is seen

leading the underperformance. 

* 2-yr Gilt yield is +2.4bp at 0.198%, 5-yr +2.7bp at 0.448%, 10-yr +2.2bp at

1.019% and 30-yr +2.2bp at 1.675% according to Tradeweb. 

- Gilts opened lower Monday ad markets traded with a risk-on tone following no

new missile test from North Korea and the recent downgrading of hurricane Irma

and the level of destruction that it may cause. 

- The move lower though was seen underpinned by latest comments from ECB Coeure

that highlighted possible impact from "exogenous shocks to the exchange rate" 

- 2nd reading of the Brexit Repeal Bill continues in the House of Commons with

vote scheduled later this evening, but is expected to scrape through. 

- There has been some light swap flows with what appeared to be receivers in 3Y

and 5Y swaps so are Monday. 

- 5-yr breakevens are 1bp wider while 15-yr swap spread is 2.9bp wider.

EGB SUMMARY: Most European debt price movement occurred at the open of trading

as markets responded to the absence of any nuclear test from North Korea. Core

yields rose 1.6bp at 10Y to 0.328% but traded sideways in the past 4 hours. 

- Since the open, the news flow has been fairly limited. Austria awarded a 5Y

and 100Y mandate to banks, with the sale 'in the near future'. Not surprisingly,

the 30Y area of Austria has underperformed. According to Tradeweb prices, this

is in the region of 1.5bp relative to Germany. 

- Ireland announced the securities to be sold at Thursday's auction. They will

sell E1bln of Irish 2026s and 2037s. 

- Peripheral debt is strong. 30Y BTPs are leading as the Italian Treasury

announced on Friday that it would not sell a BTP at that tenor. However, there

will be a new 7Y BTP. 

- On the data front, Italian July industrial production +0.1% M/M; WDA +4.4%

Y/Y, which was stronger than expected. 

- ECB: A speech by ECB's Coeure downplayed the influence of the euro in the

transmission mechanism.

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

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