It's all about geo-political........>

US TSYS SUMMARY: It's all about geo-political risks today. And, with no sign of

tensions easing on the North Korean peninsular, alongside some indirect warnings

from China Treasury yields are lower.

- Treasuries are benefiting less in the risk-off environment than Bunds and the

Bund-Tsy 10Y spread has pushed to its almost its widest in a month at 181.2bp 

- Relative to the US close, the 3-7Y spreads are all lower by around 1bp. The

very extremities of the curves in the sub-2Y and 10Y and beyond are lagging on

Friday. 

- The TY invoice spread has risen aggressively to -0.5bp, leaving very little

space before the mythical 0bp barrier is hit.

- The Japanese market was closed overnight but there are decent futures market

volumes for a Friday in the summer in the European session.

- In the rates markets, implied volatilities are rising but not excessively so

and well below what's happening for the VIX. 3m10Y USD normalised vol is 64,

compared to a multi-year lows of 59 seen earlier this month.