US TSYS HIGHER, MILD CHOP AFTER ECB NEWS; AWAIT DRAGHI

     US TSYS SUMMARY: Tsys open NY firmer but off overnight highs amid choppy

post-ECB trade: spike up to overnight high as ECB kept bond buys E60B/mo 'til

end-Dec then halved to E30B/mo starting Jan 2018 to end-Sept 2018 or beyond if

necessary. 

- TOKYO: Tsys improved after managed to exit Wed tailspin selloff. Dip buying in

cash 10s, banks buying in 5Y, 10Y, 30Y, real money buying in intermediates. But

banks and prop accts sold into strength, end users sold 2s and 7s, regional

banks sold 7Y, 10Ys and spec accts sold belly. US swaps saw 5Y receiving. 

- LONDON: Tsys drew foreign buying in 2Y,5Y, while Asian end users bought 5Y,

7Y. Others awaited ECB outcome. Tsys drew surge of bank, real$ buying in 10Y,

30Y post ECB news. Tsys then pared gains a bit. MBS had buying overnight. 

- OVERNIGHT REPO: Tsys 2Y, 3Y, 5Y tighten. 

- US SWAPS: Steady/mixed.

- US EURODLR FUTURES: Mildly higher, long end outperforms. 

- US CORPORATES/SOVEREIGNS: Thu: China MOF US$ 5Y bond +15, 10Y +25bps; others

coming too.

EGB SUMMARY: Bunds gained after ECB: 10Y Bund traded at 0.438%, -4.1 bps.

Earlier the Bund Dec-17 contract made fresh highs of 161.28 this morning, but

has since pared back some of the gains. 

- Volumes were light today with the Dec-17 contract trading only 76% of the 10

day daily average volume. 

- In Spain, Catalan President rejected an offer to address the Spanish Senate.

Events are moving quickly with the Vanguardia newspaper reporting that a call

for elections in Catolonia is imminent for Dec 20. Also, according to El Mundo

the Catalan President Carles Puigdemont is due to speak at 1330CET. The

Bund-Bonos spread tightened aggressively in the past half an hour and is is

currently trading at 113.7bp. 

- The Italian Treasury saw good demand for the new CTZ Oct-19 and also for the

BTPei May-28. 

- All had awaited ECB outcome, and ECB President Mario Draghi to speak at

1330BST.

GILT SUMMARY: UK Gilts also improved after ECB news; earlier had been meandering

around unchanged levels in very light volume awaiting the ECB key decision. UK

Gilt is at 1.387%, -1.5 bps at 8;26am ET. The curve had been modestly steeper

ahead of ECB news though as the short-end has ticked higher, but the long-end

has ticked lower. 

- Gilts did not even get a boost from a larger than expected fall in UK

distributive trades survey that showed a net of -36 retailers reported a fall in

sales volumes in October compared to last month's 2-yr high of +42%, and was the

lowest pace of growth since Mar 2009 (-44%), with markets also looking ahead to

next week's BoE MPC meeting. 

- Swap flows have also been extremely light with the only ones of note being a

Stg91mln+ payer in a 12Y swap and a E130mln+ payer of a 9Y swap 

- Swap spreads are mixed once again with the 2-yr circa 1bp wider while the

long-end of the curve is circa 1.2bp tighter. 5-yr and 10-yr Breakevens are

1.0bp tighter and the 30-yr 0.5bp tighter.

--MNI New York Bureau; tel: +1 212-669-6432; email: sheila.mullan@marketnews.com

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