Rates drifting near steady after....>

US TSYS SUMMARY: Rates drifting near steady after midday after chopping around a

narrow/higher range from O/N through early NY trade. US$ index higher (DXY +.116

93.335 vs. 93.632H; US$/Yen -.15, 110.173; equities stronger after weaker start

(emini +15.75, 2724.75), West Texas crude weaker (WTI -0.18, 71.11); gold bounce

(XAU +1.90, 1292.42). Futures volume off Tue's heavy pace.

- While Tue's focus on strong US$ & Tsy ylds to multi-yr highs, Wed on Italy

amid coalition govy headlines: admission Italian debt forgiveness to EU NOT part

of program corresponded w/Tsys trading lower by late morning. Correlation w/US$

less a factor today, while anything calming re: Italy (ergo allaying demise of

EU) deemed as risk on. Italy/Bund 10Y spd held near highs (150.1; Greece lead

+26.5 to 372; Portugal +10.2 to 118.0).

- Muted react to data (Apr housing starts -3.7% to 1.287m; IP +0.7%; CapU +0.4

to 78.0%) , as well as Fed speak (Bostic and Bullard, StL Fed Pres Bullard later

in the evening, 1830ET. Eurodlr futures mixed, short end weaker as 3M LIBOR set

+0.0050 to 2.3256%, still -0.0169/wk.

- Tsy ylds: 2Y 2.577%, 3Y 2.751%, 5Y 2.924%, 7Y 3.046%, 10Y 3.083%, 30Y 3.206%