Risk off tone as N Korea tensions......>

US TSY FLOWS: Risk off tone as N Korea tensions climb again (WSJ reported NK

warns of H-bomb test over Pacific). Tsy futures trading higher, near highs,

curve continues to flatten on decent volume as US$ weakens vs. Yen (111.98),

equities weaker (emini -3.75, 2497.25), gold rebounds (+4.45, 1295.62), oil

weaker (WTI -0.15, 50.40). 

- Asia, decent buying cash 7s, 10s, Japanese accts bought 5s and 10s, Asian

banks bought 10s mild sellers on highs w/Asian central banks buying the dip.

- London, carry-over safe-haven bid, bank portfolio buying 3s, fast and real$

buying 5s and 10s, macro fund selling 5s, insurance portfolio buying 30s, 

- Overnight repo 2s, 5s, 7s and 10s remain tight; repo mkt could see Tsys loosen

today as GSE money leaves market, sources said.

- Swaps, spds running mostly tighter, 5yr lagging while 2s continue to lead spd

curve steeper amid modest two-way, recent rate paying in 2s and 3s.

- Eurodollar, trading moderately higher across the strip, more than making up

for Thu's sale. Dec rate hike probability slips to 68.8% from 71.1% late Thu.