US Treasuries have faded from.......>

US TSYS SUMMARY: US Treasuries have faded from session best levels but remain

higher on the day, underpinned by earlier flight-to-quality bid as Italian

economic/political risk returned to the surface. US 10-yr yield is 1.3bp lower

at 2.9729% vs low of 1.9655%, while 2s/10s curve is 0.9bp flatter.

- US Tsys edged lower during a rather quiet Asian session as the Chinese Yuan

softened, while aA soft Chinese services PMI also did little to bolster risk

appetite in Asia-Pacific dealing.

- All that turned around though as just before London trade, newswires reported

that the IMF economic assessment of Italy was being delayed and that the budget

meeting that was supposed to have taken place yesterday was in fact going ahead

today. This set-off alarm bells in the front-end of the BTP curve and triggered

risk-off buying in Tsys, Bunds and Gilts.

- Markets calmed down though roughly half-way through London morning session and

Tsys faded the higher move despite soft UK service PMI data as attention turned

to US non-farm payroll data later

- Eurodollar futures are steady to higher, strip touch flatter in low volume