US Treasuries were largely stable...>

US TSYS SUMMARY: US Treasuries were largely stable in Asia with yield on the

10-year Treasury note hovering around the 2.28% level, but then sold off at

start of European session on the back of selling in 10-yr call options and

higher than expected Eurozone flash core CPI data. 10-yr Yield currently is

2.291%, little changed form Friday's close.

- A slight increase in political tension over the weekend after Russia orders

755 US diplomatic staff working at US embassies in Russia to leave and Japanese

PM Abe agreeing with Trump that further action is needed on N.Korea, all added

to flight-to-quality bid in USTs at start of Asian open.

- However markets were subdued with very light volume and flows seen, before

start of European session, where US Treasuries reversed gains following screen

selling in 10-year Tsy option calls. Newswire reports from Japan on possible

further N.Korea missile test temporarily halted the slide, only for higher than

expected Eurozone flash core CPI (1.2% vs 1.1% expected), then saw Treasuries

track German bunds lower.