Tsys weaker but well off lows.......>

US TSYS SUMMARY: Tsys weaker but well off lows post ADP (+178k; Apr rev'n +163).

Tsys had reversed appr two-thirds Tue's safe-haven rally as Italy remains focus,

decent Italian BTP/CCTEU auction performance (and higher flash inflation data

from German regions and Spain) helped narrow peripherals (Italy 10Y vs. Bunds

-40.1, Spain -18.9. Portugal -23.9, Greece -29.2).

- USD index giving back (DXY -0.626, 94.194; US$ vs. Yen +0.12, 108.89); stocks

rebound (emini +34.5, 2726.75); gold firmer (XAU +3.20, 1302.06); West Texas

crude bounce (WTI +1.57 to 68.30). 

- Trade off Tue's heavy pace w/real$ and bank portfolios selling intermediates

and long end earlier, two-way by late morning w/fast and real$ across the curve,

flatteners in 2s and 5s vs. 30s, Tsy futures roll volume slows ahead Thu final

notice. Cautious positioning ahead Fri's May NFP. rate hikes rebound, June at

100%, Sep appr 77%, fourth hike in Dec at 35% according to MNI PINCH model),

short end lagging w/3M LIBOR -0.0069 to 2.3003% (-0.0178/wk). 

- Tsy cash/ylds: 2Y 100-05.5 (2.407%), 5Y 100-11.5 (2.671%), 10Y 100-08.5

(2.842%), 30Y 102-05 (3.014%).