*** Spds still running tighter, but a......>

US SWAPS: *** Spds still running tighter, but a little off midmorning lows at

the moment. Could see a repeat of early last week's implosion amid heavy

year-end customer position unwinds amid tight balance sheets for dealers. Really

decent rate and spd receiving in 2s in first half, over $1B nominal in 2s over

last hour, receiver flys include 2s5s10s and 2s4s5s. Earlier, short end

narrowing outpaced amid continued better receivers in 2s, 5s, payer in 10s and a

2s/5s/10s receiver flys. 

- Good entry point for wideners? Morgan Stanley strategists note "Libor-OIS

Slowing issuance of CPs suggests that Libor-OIS is unlikely to widen further

into year-end as banks already front-loaded year-end funding needs. This could

also lead to relatively subdued issuance in 1Q19." MS notes risk to market

pricing of Mar'19 FRAOIS is to the upside are due to "see outflows and

shortening WAMs in 1Q...As a result, we remain in March 2019 3m FRAOIS wideners

and expect to re-enter 2y swap spread wideners early next year."