Treasuries performed well in Asia...>

US TSYS SUMMARY: Treasuries performed well in Asia led by the Bond sector as the

final auction of the week (the 30Y Bond) saw decent demand. However, the yield

curve has pivoted and sub-5Y yields are higher relative to the NY close but 7Y

and upwards are lower.

- The strong Asian session gave way to weakness in Europe as an ECB watchers

conference delivered a subtle hawkish message delivered in a more academic way

by Draghi, principally saying that the Philipps curve is making a comeback.

- the curve flattening is reaching extremes. The 5-10Y spread on the swap curve

has hit 10.6bp, its lowest for over 11 years. Despite this MNI identified the

following trade: The US curve is flattening again today. At 08:00GMT there

appeared to be a USD51.2k DV01 5Y-10Y flattener at 10.8bp.

- At last, there has been some decent narrowing in swap spreads led by the 2Y

spread declining 0.6bp to 31.8bp. Most swap spread movement are driven by upward

libor pressure rather than new deals, not least because the very flat curve

discourages issuers to swap into floating.

- 2Y UST is 2.26% and 10Y at 2.84%.