US 10-yr future is trading close....>

US TSYS SUMMARY: US 10-yr future is trading close to session highs, having

bounced off lows in Asia in wake of rise in geo-political tensions and renewed

Italy concerns. US 10-yr Tsy yield is 1.3bp lower at 3.0594% with yield curve

modestly flatter as 2-yr remains anchored.

- Overnight N.Korea announced it had cancelled scheduled summit with S.Korea

because or its joint military exercises with US and threated to cancel the one

with the US if they continued to demand North Korea to give up its nuclear

programme. This supported a recovery in Treasuries which then got a further

boost from concerns in Italy.

- Flight-to-quality buying was seen as the Huffington Post leak an 'old' draft

coalition plan between M5S and Lega which showed they wanted ECB to cancel

E250bln of debt and would work to allow EMU members to leave. It was played down

later but the damage had already been done.

- Eurodollar futures have edged higher with strip flattening as green and blues

contracts are 2.5 ticks higher, while whites remain steady. 

- US IP, housing starts and comments from Bostic and Bollard are eyed today.