ASIA/US/EUROPE BOND/STOCK RECAP: TSYS WEAK RANGE INTO DEC JOBS

     US TSYS/STOCKS: US Treasuries prices open NY weaker, mildly steeper after

overnight range trade into the key 8:30am ET Dec US nonfarm payroll employment

data, expected to have normal release after Thur snow-tied delays; MNI poll:

median est +190k, perhaps a little low after Thu's +250k ADP number, whisper was

for 219K gain. 

- TOKYO: Tsys range until early UK on light 2way flows. Stronger Asian stocks

esp. Nikkei and firm US$ spur some Tsys selling. Asian real$ sold 7Ys. Foreign

central bank buying short end, other buying in 3Y, 5Ys; 5/30Y steepeners. 

- LONDON: Range in Tsys, intermeds/long end pressured but drew prop/fast$ buying

long end. More buying in 3Y,5Y Tsys, while bank portfolio 10Y sales arose. Fast$

rate payers in short end. 

- US EURODLR FUTURES: Buyer of 12,500 EDH8 Eurodlr futs at 98.19, part vs. EDM8

at 98.01. 

- US SWAPS: Mostly wider, 10Y near disinversion. - OVERNIGHT REPO: Tsy 3Y, 10Y

tight. 

- US HIGH-GRADE CORPORATE ISSUANCE: Busy; late Fri rate-lock hedges into Mon.

GILT SUMMARY: Gilts have pared earlier gains to trade little changed from

Thursday closing levels with the exception of the 2-yr which is underperforming

the rest of the curve ahead of key US non-farm payroll data. 

- Markets seemed to have dismissed the soft Eurozone flash core CPI number,

renewed concerns over UK consumers and sharp drop in unit labour costs. 

- 2-yr Gilt yield is +0.6bp at 0.498%, 5-yr +0.2bp at 0.755%, 10-yr -0.4bp at

1.230%, 30-yr -0.1bp at 1.780% and 50-yr -0.1bp at 1.582%. 

- March Gilt future was trading little changed from Thursdays settlement price,

but suddenly rallied over 20 ticks, more than likely supported by large 4,250 G

H8 future block and confirmation of sharp drop in UK car sales for 2017. Sharp

drop in UK unit labour costs also initially support Gilts. 

- Gilts actually pared gains though in wake of Eurozone flash core CPI coming in

at 0.9% y/y vs expectations of 1.0% y/y. 

- 5-yr breakevens have risen above its 100-DMA and are trading 2.1bp wider at

2.976%, while 2-yr swaps spreads are 3.7bp tighter at 29.4bps. - Attention now

turns to US non-farm payroll and average weekly earnings data.

EGB SUMMARY: The main theme in European debt markets has been the firm bid at

the long end of the peripheral curves because while the core markets have shown

a small amount of volatility, they are essentially unchanged. 

- Thus far, the Bund yield is +0.3bp at a yield of 0.437% and movements along

the remainder of the curve have been small. 

- By contrast, Italian and Portuguese 10Y spreads are 2bp tighter to Germany,

Spain 4bp tighter and the Greek market 7.5bp tighter. 

- In data, the extremely volatile German retail sales report showed an

above-consensus 4.4% annual gain in November, French December consumer

confidence was smartly above consensus at 105, up from 102 and the only bond

bullish release was that Eurozone core CPI repeated the 0.9% annual gain in

December, disappointing an expectation that it would hit 1%. 

- There has been very little reaction to any of the data releases. 

- A heavy US data schedule has dampened volatility this morning.

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

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