The Mar-18 10Y T-note contract......>

US TSYS SUMMARY: The Mar-18 10Y T-note contract held steady overnight then

declining as Europe opened. The drop was on the back of the 10Y contract

following the Bund lower, itself more flow than new related. The 10Y Treasury

yield is currently trading 1.6bp higher at 2.417%. There has been a significant

break-down in the usual strong link between the JPY and 10Y UST yield.

- Democrat Doug Jones won Senate election defeating GOP's Roy Moore that

provides a significant balance of power shift, so the Republicans now only hold

a 51-49 advantage. The swearing in ceremony is likely two weeks away but the tax

plan is threatened by the result.

- Later today sees the important CPI report followed by an expected Fed hike,

with attention more keenly focussed on the new dotplots and Yellen's final press

conference. Going into the meeting, the 2-10Y spread remains close to its multi

year low and is 57.6bp. The 10-30Y spread is at its lowest since 2008; a very

narrow 37bp and just 16.9bp along the same tenors on the swap curve.