ASIA JGBs - The benchmark 10-year futures contract was up 7 ticks to 137.03 by 0625, after more comments from Fed officials and recent weak data prompted further speculation that the FOMC would cut interest rates at its next meeting. Some of the gains were offset by a solid rebound in stocks. Japan's Economics Minister Ota says economy is still moving towards the end of deflation, price moves need to be carefully monitored (RTRS) China may raise rates 54 basis points next year, China Securities Journal Says (BBG) GLOBAL FIXED INCOME SPREADS: US 2s/10s (0630): 86.38 bps (88.19 bps at 2100); US 10s/30s (0630): 40.66 bps (41.07 bps at 2100); EU 2s/10s (0630): Unchanged (32.50 bps at 2100); EU 10s/30s (0630): Unchanged (43.03 bps at 2100) US/GE 10s (0630): Unchanged (11.84 bps at 2100) UK/GE 10s (0630): Unchanged (50.83 bps at 2100) U.S. Fed's Bernanke: 'resurgence in financial strains in recent weeks had dimmed the outlook for the U.S. economy' (RTRS)** In a tone similar, although not exactly the same to Kohn's on Wednesday, Bernanke's comments fuelled more speculation that the FOMC could lower interest rates again. Fed's Mishkin says that the near-term path of interest rates is highly uncertain, depends on incoming data (RTRS)** He added that uncertainty about growth is even higher than typical levels of the past two decades. Finally, Miskin said that core inflation has been "well contained." Bush Administration and financial institutions are close to agreeing on a plan to freeze rates on troubled subprime home loans (WSJ)** USD 13.0 billion 5-year note auction sees tepid demand (BBG) Bid-to-cover was 2.26 times vs. 2.66 times neutral (2.69 times previous), indirect bidders were 21.4% vs. 25.3% neutral (22% previous). Lehman Bros month-end extensions in treasuries extends by an exceptionally large +0.21 years into December (MNSI) EUROPE ECB rate cut pleas grow as Euribor goes mad (Telegraph)** The paper says that concerns come as one-month EURIBOR spiked violently by 60 basis points to 4.87, the sharpest move ever recorded. ECB's Trichet: 'sees no second-round effects currently, if avoided, inflation expectations will stay stable (RTRS)** Trichet also said that growth would be lower than previously forecast. Swiss GDP Q3 GDP, November CPI higher than expected (BBG) Q3 GDP was 0.8% q/q vs. 0.7% exp. (0.8% prev.), November CPI was 0.5% m/m vs. 0.2% exp. (0.9% prev.). Germany's Finance Minister, Steinbrueck, sees many signals for good economic performance in 2008, sees inflation dropping in 2008 (RTRS)** Despite these comments, the German IWH association cut Germany's 2008 GDP forecast to below 2.0%. French October jobless down 0.2% m/m on broad measure, down 1.2% on narrow measure (RTRS) iBoxx Euro Sovereign index extends by +0.01 years into December, lower than the historical average (MNSI) FOREIGN EXCHANGE ECB's Trichet: refuses to comment on FX intervention, says brutal FX moves are unwelcome (RTRS)** In related comments, Germany's finance minister said Europeans prefer a strong euro to a weak euro. Japan, China are likely to discuss FX rates, including the Yuan in high-level talks this weekend, Japan's finance minister said (RTRS) COMMODITIES Oil eases below USD 91.00/barrel overnight to USD 90.95, with news that Canada-U.S. pipeline could resume operation within days (RTRS) WTI for January delivery was trading at USD 90.95, down 0.06. Endbridge said that line 4 is back in service after an outage, while line 3 remains shut (RTRS) The company also said that its pipeline system is now running at 80% of capacity.