ASIA/US/EUROPE BOND & STOCK RECAP: US TSYS,EGBS,UK GILTS LOWER

     US TSYS SUMMARY: Treasuries open NY weaker still after overnight decline

amid mixed flows, risk-on mood. Tsys shorts set into 1pm ET $20B 10Y Tsy

reopening. US data: 10am ET JOLTS job openings. 

- TOKYO: UN Security Council set more sanctions vs. NKorea, which aided Asian

stocks, Nikkei +1.2%. Tsys opened steady to Mon NY close, held narrow range amid

moderate 2way flow from asset managers, banks and credit funds. Asian central

bank selling occurred in 5Y notes while foreign central banks two-way in 10s. 

- LONDON: Tsys declined amid sporadic buying, profit tkg in 5s and 10s, end

users bought intermediates, corp and auction tied hedging; misc sales in long

end. EGBS pressured by Dutch ten year note issuance, 30-year German linker

issuance, stronger UK inflation. UK Parliament passed Brexit legislation. 

- US STOCKS: Index futures firmer. Apple at 1pm ET unveils new iPhone lineup. -

US SWAPS: Spreads running mixed, wings wider. 

- OVERNIGHT REPO: Tsy 3Y, 5Y, 10Y tighter, others quiet. 

- US CORPORATE BOND ISSUANCE: More than seven deals to price Tues such as

Finland, KDB, Ontario Teachers' Finance Trust.

GILT SUMMARY: Higher than expected UK August inflation and continuation of

slight risk-on sentiment has led the Gilt market to sell-off sharply Tuesday

with the 10-year part of the yield curve seen leading the underperformance. 

- UK 10Y Gilt yield was higher at 1.111% at 10:06am ET, up 7.0 bps on day.

- Gilts opened lower with yields around 1.8bp higher across the curve as markets

continued to trade with risk-on sentiment as UN unanimously agreed to impose new

sanctions on N.Korea and the Repeal Bill passed 2nd reading in House of Commons.

- Dec Gilts took another leg lower just ahead of UK Aug CPI release, with

traders noting a block sell of 1.5k future contracts at 127.00. 

- Gilt future contract then spiked to session low of 126.81 in reaction to UK

CPI rising to 2.9% y/y, way above MNI median forecast for a 1bp rise to 2.7%

y/y, before some profit taking saw the contract pare losses. 

- Swap flows have been light so far Tuesday, however 2-yr swap spreads are 2bp

wider, while there has been a mixed response in UK breakevens with 5-yr 0.8bp

wider, but 10-yr is little changed and 30-yr 0.4bp tighter.

EGB SUMMARY: EGB markets started lower and never recovered; it has been a slow

grind lower all through the morning session as heavy supply appears to be taking

its toll. 

- Aside from supply, it appears that last week's bull run is starting to unwind.

The Dec-17 Bund contract open interest ramped up extremely fast last week and is

the highest since late June. 

- On Tuesday morning, the biggest downturn on the curve is reserved for the RXZ7

CTD contract. 

- UK CPI data printed firmer than expected and a generally decent risk-on tone

has also helped push EGBs lower today. 

- The Austrian 5Y and 100Y syndicated deals appear to be going strongly, with

guidance having been tightened twice already. 

- The same cannot be said for the 30Y Bund linker that only just saw bids

sufficient to beat the E0.5bln amount on sale. 

- Finally, the Netherlands sold E2.2bln of 10Y paper, on the low side of the

2-3bln target range.

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

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