Early twist steepening of the Tsy curve.....>

US TSYS: Early twist steepening of the Tsy curve (spill over from NY trade) has

more than reversed, with yields unchanged to 0.8bp richer across the curve as we

move into European hours, with front month WTI crude trading on the defensive.

- Swap curve has taken its lead from Tsys all session, with spreads mixed at

writing.

- T-Notes happy to hold a tight range after going out near lows on Monday, last

-0-00+ at 138-20+.

- For Eurodollar futures, EDM0 continues to outperform through the reds,

contract +1.0. vs. unchanged to -0.5 for the remainder of the contracts in that

area of the strip. Focus will fall on today's LIBOR fixing after 3-Month FRA/OIS

bottomed at ~30bp yesterday

- Elsewhere, advance trade data, retail inventories, S&P house prices, Richmond

Fed m'fing survey & consumer confidence will all hit. We will also see 2-Year

FRN & conventional 7-Year supply. As a reminder, Monday's 2- & 5-Year Note

auctions stopped through their respective WI yields, with above average cover

ratios noted, as dealer takedown undershot the recent averages.