US Tsys are trading as intra-day....>

US TSYS SUMMARY: US Tsys are trading as intra-day lows weighed by easing of

political tension in Italy and higher than expected German regional flash

inflation that saw Bund/BTP tighten sharply. US 10-yr note yield is 9.6bp higher

at 2.877% with yield curve flatter as 5-yr rises 11.5bps and 30-yr +7.7bps.

- 10-yr Tsy note yield hit low of 2.759% at the beginning of Asian session on

momentum from Tuesdays US close, but then sold off in wake of better than

expected Japan retail sales data and a move that looked too far too fast.

- Tsys extended their sell off as European session got underway, weighed by

possibility of a last ditch government being formed in Italy, higher expected

rise in German flash inflation data from the regions and retail sales, plus

surprise fall in German unemployment rate.

- Eurodollars are sitting at session lows, strip steeper as green and blue

contracts fall by 14.5 to 16 ticks vs 1.75 to 10.5 fall in whites. Both swap

spreads and breakevens are little changed.

- Looking ahead main events will be release of 2nd estimate of US Q1 GDP and

core PCE data.