ASIA/US/EUROPE BOND & STOCK RECAP: TSYS WEAKER PRE-JOBS

     US TSYS SUMMARY: Treasuries prices traded mildly weaker Friday morning in

cautious consolidation ahead of the key 8:30am ET US July nonfarm payroll

employment. MNI econ poll had a +181K median estimate for July jobs. 

- TOKYO: Tsys began higher, extending Thu NY long-end-led rally in early action

with mild risk-off buys on news that US special prosecutor Mueller impaneled

grand jury to investigate alleged Russian interference in US election. But some

profit-taking arose: end users sold 7Ys, regional banks and Asian accounts sold

10s, 30s; foreign central bk selling in long end. Japan's Nikkei stk index

-0.38%. Japan's GPIF had US$1.3 Trln in investment assets. 

- LONDON: Tsys ebbed, tracking German Bunds lower on stronger German factory

orders; light 2way positioning into jobs. US stk futures mildly firmer, crude

oil soft. 

- US SWAPS: Steady/mildly wider in belly. 

- O/N REPO: Tsy 2Y, 3Y, 10Y bid. CORPS: Nothing Fri; British American Tobacco

investor calls begin Mon on potential US$ 3Y-30y deal via BAML/BARC/C/DB/HSBC;

cld be EUR/GBP debt 4Y-13Y, via DB/ING/NATW/SANT/SG.

GILT SUMMARY: UK Gilts trading modestly lower with the 2-year part of the yield

curve the worst performer as markets continue to digest Thursday's BoE monetary

policy announcement and then BoE Broadbent's comments early this morning. 

- Gilts opened marginally higher as markets continued to digest the non-hawkish

take of the BoE monetary policy decision on Thursday and comments from Governor

Mark Carney -- sluggish growth and brexit consequences beginning to build. 

- Prices reversed though as market took notice of early morning comments from

BOE Broadbent saying that he thinks the UK economy was better placed and could

cope with an interest rate hike. But did acknowledge Brexit is putting companies

off new investment. 

- The comments weighed on the short-end of the yield curve more as markets

priced in slightly higher chances of a rate rise within the next 2-years. - Swap

spreads are steady to marginally wider, while breakevens are also little

changed.

EGB SUMMARY: EGBs are currently trading steady to modestly ahead of NY session

trade having reversed earlier small bid as traders position themselves ahead to

key US payroll and average hourly earnings data. Volume has been very low

though. 

- German 10-year yield is +0.2bp at 0.455%, while the 30-year part of the yield

curve is marginally underperforming at +0.6bps. 

- Market sources reported large French/German spread trade going through futures

with 8,154 OATU7 @ 149.77 sold vs buying 6,470 RXU7 @ 163.41, which weighed on

semi-core and periphery bonds in the morning session. 

- EMU periphery are trading mixed after long-end of Spain recovered from a weak

start. While there is a disparity between 2-year Italy and Spain yields though

with the former rising by 1bp while the latter is 1bp lower. 

- German June factoring orders came in higher than expected, rising 1% m/m.

There was little further Eurozone data, so attention is now turning firmly to

key US non-farm payroll data this afternoon, with risk seen to the upside to MNI

median forecast of +181k.

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

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