The US Treasury market faded........>

US TSYS SUMMARY: The US Treasury market faded through the Asian trading session

but has seen a small revival in the past hour of European trading as EGBs

captured a decent bid emanating from the periphery.

- Financial markets have a risk-on feel, helped by a more conciliatory tone

towards North Korean from Rex Tillerson. The S&P mini future is pointing to a

0.25% gain at the open.

- The main talking point in Europe is the late Friday upgrade to Portugal's

rating that takes it back into investment grade. It's 10Y spread to Germany is

lower by 28bp this morning and is pushing other credit spreads tighter.

- Ukraine has started selling a 15Y bmk-sized USD today and Hyundai Capital

America and Kookmin Bank are also tapping markets. 

- US data is limited to NAHB and TIC flows data. However, the elephant in the

room is the FOMC meeting on Wednesday with new information on a taper expected.

- Currently: UST 2Y +0.4bp at 1.385%, 10Y +0.7bp at 1.861%. Swap spreads are

close to unchanged but the 5Y cross currency basis swap is 0.4bp higher at

-34bp. DXY is unchanged at 91.95.