US TSYS OPEN NY FIRMER AFTER OVERNIGHT 2-WAY RANGE TRADE

     US TSYS SUMMARY: Treasuries open Tues higher, near overnight price high,

aided by recent Reuters ECB source story saying Gov Cncil differs whether shd

announce "firm end-buy" for ECB bond buy program. Tsys may be quiet as all await

Wed 2pm ET FOMC mtg outcome, 2:30pm Wed Fed Chr Yellen news conf. 

- TOKYO: Tsys saw early buys, end-user buying across curve; real$ buying

intermeds; asset mgrs bought 5Y, 10Y. Jpn accts bought 5Y but sold lg end;

insurance portfls buying lg end. Jpn Nikkei stock index +2%: catchup on global

stk gain after Mon Jpn holiday. 

- LONDON: Tsys carryover buying in 2-way trade: bk portfls bought 3Y, 5Y;

European accts bought 5Y, sold 7Ys. Real$ bought 10y, end-users and foreign

central banks sold 10Y, 30Y. Tsys gained more on ECB story. - EURODLR FUTURES:

Mildly higher rebound from Mon weakness, sale. 

- O/N RP: Tsy 3Y, 5Y, 7Y, 10Y notes all tight in RP. 

- US SWAPS: Steady/mild tightness; bk paying 10Y swaps, fast$ in belly. 

- US HIGH-GRADE CORPS: Tues: KazTransGas 10Y, SP PowerAssts 10Y, South Africa

10Y, 30Y.

GILT SUMMARY: Gilts are trading mixed with the belly of the yield curve little

changed, however the wings (2-yr and 30-yr) are modestly higher despite a

disappointing 30-yr Gilt re-opening auction. 

- 2-yr Gilt yield is -0.7bp at 0.415%, 5-yr unchanged at 0.732%, 10-yr +0.3bp at

1.305% and 30-yr -0.4bp at 1.902% according to Tradeweb. 

- Gilts opened little changed from Monday's closing levels due to lack of

direction seen overnight in Asia. However, markets were waking up to a Times

article reporting that there will be a special cabinet meeting on Thursday ahead

of May's key Brexit speech on Friday in Florence. The move seen to get some sort

of government consensus on Brexit strategy. 

- There was some receiving in 5y5y and 10y5y swaps earlier which helped push

Gilts higher, while 30-yr yield dropped 3bp before its re-opening auction. An

increase in the tail and drop in cover at the auction weighed on Gilts though

with the 30-yr paring gains by 2bps. 

- 30-yr breakevens are 1.7bp wider while swap spreads are little changed

EGB SUMMARY: There is a small bid to the longer ends of core markets today but

the sub-10Y area is almost unchanged. To be precise, the 10Y Bund yield is lower

by around 0.5bp at 0.45%. - Peripheral markets are performing strongly although

early gains in Portugal, which saw the Bund-PGB spread decline 5bp, have been

surrendered. Instead, investors are buying Bonos & BTPs. In Italy, senior bank

credit spreads tightened upon news that a bond tranche that sits between Junior

and Senior tranches could be introduced to buffer senior debt holder in the

event of a bailout. However, Spanish debt is outperforming BTPs today. 

- The Swiss franc fell sharply this morning as investors speculated that large

Swiss insurance companies would need dollars to pay for hurricane damage. This

has knock-on effects upon SNB purchases of EGBs but the impact was insignificant

today. 

- Within the semi-core Belgian debt is strongest after completing 94% of

issuance needs this year. 

- The only decent European data was from the ZEW, which came firmer than

expected.

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

[TOPICS: MTABLE,MNUEQ$,M$U$$$,MR$$$$,M$$FI$,MN$FI$]