FI mkts are mostly higher heading......>

BOND SUMMARY: FI mkts are mostly higher heading into EU hours as Asia-Pac

equities struggle. Comments from NY Fed's Logan (head of mkt ops monitoring &

analysis at the NY Fed) had little impact on Tsys, touching on repo matters, Tsy

purchases & bank reserve issues. Little interest was given to reports in the

NY-Asia crossover suggesting that North Korea has tested a "tactical weapon."

The country has implemented similar tests in recent times (including when

negotiations with the U.S. have broken down). This may have helped support FI in

Asia. T-Notes last 123.01, U.S. yields trade 1.4-2.7bp lower across the curve.

- The AU curve has reversed its early steepening, and more, with the moves on

the back of a decent enough labour market report unwinding. YM/XM at 50.5 and

the cash equivalent at 46.6bp. YM last -0.5 tick, XM +2.0 tick. Bills trade 2

ticks lower to 1 tick higher through the reds.

- JGB futures trade 17 ticks above settlement after a modest recovery overnight,

with yields a touch lower across the curve, and some modest flattening creeping

in on the back of a strong 5-15.5 Year liquidity enhancement auction.

- German FI a touch higher, Schatz +1.0 tick, Bobls +4.0 ticks, Bunds +20 ticks.