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Free AccessUS TSYS OPEN NY WEAK, THEN RISE ON WEAK US CAR SALES
US TSYS SUMMARY: UPDATE: Treasuries jumped higher midmorning NY after weak
car sales.
US TSYS SUMMARY: Treasuries open NY mildly lower, flatter after mkt peaked about
6am ET. Mkt awaits 8:30am ET June personal income/spending report which has PCE
deflator that Fed watches. Tsys futures long end outperforming on moderate
volume (TYU leads w/260k).
- TOKYO: Markets digested firmer China PMI. RBA deemed dovish. Tsys saw credit
tied selling in 5s, real$ bought intermediates. Asian stks gain, Japan's Nikkei
+0.3%; Australia ASX-200 +0.91%.
- LONDON: Tsys range, 2way flows in intermediates, bk portfolio selling in 5Y,
10Y. Mild buying in belly to long end by hedge funds, real$. Tsys underperform
German Bunds amid late month end bid. MBS saw overnight buying. Ex Fed Chr
Greenspan said US rates 'unsustainably low", cld be "fast" corrective rate rise,
said Bloomberg. US stk futures firm: S&P E-mini +5 to 2473. NYMEX crude oil
-0.27% at $49.90/barrel.
- US SWAPS: O/night bk portfolio paying intermeds; fast$ receiving.
- HIGH-GRADE US CORPS: Tues ADB 5Y/10Y, KFW $1B 4Y, Axis Bk 5Y bmk and NWB 2Y
FRN.
- US AGENCIES: FHLBks passed on it sissuance slot today.
- O/N RP: Old Tsy 5Y note tight.
EGB SUMMARY: After a slow start Bunds have slowly drifted higher, curves bull
flattening helped by slight downward revision to Eurozone manufacturing PMI,
decent upward price action in futures in wake of good demand at 10-yr Gilt and
2-yr Schatz auctions. German 10-yr Bund yield last 2.2bp lower at 0.521%.
- It was a steady start in the European Government Bond markets with the 10-year
Bund initially trading in a tight 19 tick range with little direction seen
overnight. The US Dollar was slightly weaker due to continued political turmoil
in the US. While the RBA decided to leave rates unchanged as expected.
- Bund started to squeeze higher as French final mfg PMI was revised lower which
weighed on overall EMU mfg PMI. Consistent but small buying out the German curve
in illiquid summer markets, decent demand at both 10-yr Gilt and 2-yr Schatz
auction then helped Bunds tick higher. Some also suggested market tried to go
short into month-end/supply and were now covering those positions.
- EMU periphery have given up earlier gains versus German Bunds as support from
large Spain and Italy redemptions diminish as Bunds squeeze higher. Markets also
looking ahead to Spain supply on Thursday.
GILTS SUMMARY: Sep Gilts future at 9:50am ET were still lagging the recovery
seen in US Treasury futures, despite following them on the way down. Sep Gilt
last 15 ticks lower on the day at 125.87 with 10-yr yield 1.3bp higher at 1.243%
- Earlier Gilts traded mixed again with the long-end outperforming following
solid 10-year Gilt auction and therefore flattening the yield curve. While the
short-end is seen weighed by upbeat UK manufacturing PMI and BoE Super Thursday.
- Gilts opened lower however, taking cue from soft US Treasuries overnight,
continued strength in the pound vs US Dollar and the upcoming 10-yr Gilt
re-opening auction for Stg2.25bln.
- Gilts then saw some selling in wake of stronger than expected UK mfg PMI (55.1
vs consensus of 54.4), but quickly recovered in run-up to 10-yr Gilt auction
close with primary dealers seeing good demand. - The good demand at the auction
was confirmed with demand coming in at 2.56 times vs 2.28 previously which
supported another move higher in Gilts. But some profit taking saw Gilt fade off
session highs. - Swap spreads are little changed while 5-yr & 10-yr breakevens
are 1bp wider.
--MNI New York Bureau; tel: +1 212-669-6432; email: sheila.mullan@marketnews.com
[TOPICS: MNUEQ$,M$U$$$,MR$$$$,M$$FI$,MN$FI$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.