###POV: CHINA/JAPAN: Buyers are streaming...>

US TSYS: ###POV: CHINA/JAPAN: Buyers are streaming back into US Treasury market

from Asia, once again, and it's making a difference. This Asian flow is from

China as it return from Golden week holidays last week, and Japan as the new

fiscal half year gets underway. 

- MNI thinks this flow will continue near term as contacts tell us yield

stability is key for such clients to be drawn into Tsys, and stability is amply

demonstrated by the contained level of MOVE index of Treasury mkt volatility. 

- One good indicator is tonight's Japanese MOF data of foreign bond buying

flows. The last data, out Oct. 5th, showed a large $10Bln OUTflow from foreign

bonds through week of Sept. 29th, as often occurs into half-year-end close, said

BMO analyst Aaron Kohli, "the largest since late April." 

- "We have been writing that seasonally by end-October, you have a big flip in

Japanese flows on Treasuries, and they will essentially start buying," Kohli

said. "We are basically watching tonight's data to see if that turn has

occurred. If the MOF data reflects this turn in Japanese flows in foreign bonds,

we will conclude that buying has started."