Mild risk-on, Tsys little weaker on....>

US TSY FLOWS: Mild risk-on, Tsys little weaker on light volume (TYH<210k, Japan

out for one day holiday), yld curves mixed.

Equities posting modest gains (SPX +7.5, 2713.75) following bounce in Chinese

and European stocks. US$ index adds to last wk's gains (+.184, 96.821 vs.

96.693H).

- Slow start to the week with NY Fed expectations survey for February; 13- and

26W bill auctions. Data picks up midweek with backlog Nov & Dec items from US

Census Dept Thur. Tensions likely to grow as wk proceeds if no border funding

resolution ahead Fri's U.S. govt shutdown deadline. Not a good sign, weekend

headlines said border security negotiations had broken down.

- Light two-way during much of Asia hours (China returns from wk long holiday,

Japan out), modest selling across the curve in early London trade w/prop and

real$ selling intermediates, Littls to no deal-tied hedging. Not much of a react

to another lower 3M LIBOR set (-0.0097 to 2.6880%, adding to last wk's sharp

decline of -0.0349). Tsy cash/ylds: 2Y 100-01.62 (2.471%), 5Y 100-06 (2.458%),

10Y 99-25.5 (2.646%), 30Y 100-08 (2.987%).