The Treasury market continued.......>

US TSYS SUMMARY: The Treasury market continued lower in late US and early Asian

trade but has found support in the 126-13 area. 

- The final auction of the week, the Bond was a soft one and indeed, none of the

three auctions were particularly strong.

- In the swaps market, we note that the vast majority of the larger trades that

we track were receivers. That said, longer dated swap spreads are marginally

wider.

- Technically, for the 10Y yield, the 100 day moving average sits at 2.24%

around 4bp above where it is currently trading but a CPI release, which is just

six days ahead of a possible Fed taper announcement probably has the market

impact to threaten this level.

- The yield curve slope is close to unchanged today. We hear of Japanese

purchases in the 7-10Y section of the curve and particularly for the 10Y

current. The Bond sector has found few buyers. The 2-10Y UST spread is sitting

around 8bp above recent lows.