Tsys ended Mon mainly higher after.....>

US TSY/RECAP: Tsys ended Mon mainly higher after risk-off mood, afternoon

N.Korea jitters; curve steeper. Kyodo said Japan had received radio signals

suggesting N.Korea preparing for missile launch test; Kyodo said N.Korea

satellite image did not show missile or mobile launcher, Japan did not specify

type of possible NK missile. 

- Quiet afternoon range after good $34B 5Y auction: 2.066% rate, 65.8%

indirects, good 11.4% directs, small 22.8% dealers. Mixed 2Y auction 1.765%

rate, soft 41.2% indirects but good 16.99% directs, so large 41.9% for dealers. 

- Tsys futures volume artificially heavy: large pick-up in rolling from Dec to

March futures into Thu first notice date (Mar top step, Dec expires mid/late

Dec). Early flow: large 10Y futrs block buy: +22.9k TYH, 124-24 helping spur

gains; FX-tied bid as US$ weak v. yen, Bund-tied aid. But Tsys digested

pre-auctions shorts and rate-locks into 2Y, 5Y sales, busy high-grade corp bd

issuance. Fast$ and prop acct buys before rates reversed early gain; Mar

10Y-ultra Blck sale(-7.9k, 133-30) spurred sales.

- T-Notes up 0.5 ticks in Asia at 125.04+, 10-Year yield last -0.7bp at 2.321%