Core FI drifts back from highs after the....>

US TSYS: Core FI drifts back from highs after the lack of escalation in tensions

at the Sino-U.S. diplomatic summit, alongside a seeming want to work together

(albeit with some issues flagged & a lack of concrete steps outlined), which

took some of the edge off a risk averse Asia session. The John Bolton

"revelations" re: President Trump, made late Wednesday, continued North Korean

sabre rattling/reported movement into the DMZ & Sino U.S. tension surrounding

the Uighur Muslims all weighed on the broader risk backdrop in early trade. Some

also pointed to the formal outlining of the PBoC's money growth targets as a

+ve, but the communique at the annual NPC which flagged such a jump. T-Notes

+0-03+ at 138-22+ as the bid fades during another above average Asia-Pac session

on the volume front (T-Notes have seen over 110K trade at typing), yields

0.4-3.7bp richer in cash trade as the curve bull flattens.

- Weekly initial jobless claims data, as well as Fed speak from Mester & Bullard

headline today (Mester added little new to the policy debate late Wednesday).

- Also worth remembering that Wednesday saw a very strong 20-Year auction (which

stopped through WI by over 1.0bp, alongside strong bidding metrics).