A fairly substantial downside miss.....>

BOND SUMMARY: A fairly substantial downside miss in EMU April flash CPI data,

particularly core which came in at 0.7% Y/Y (vs 0.9% exp) shot EGBs higher after

some early session weakness post-FOMC. Bund futures jumped to intraday highs,

RXM8 26 ticks higher last trading at 158.85.

- Not a great deal of movement in 2018-19 ECB rate expectations regardless, with

MNI Pinch seeing a modest lowering but nothing significant. But Euribor curve

seeing some flattening with blues rallying, ERZ1 up 4 ticks at 99.19.

- 10-yr Bund/Bono spread extended its tightening move following the decent 3-yr,

10-yr and 50-yr Bono auctions, tightened further in wake of the EMU infl data,

then widened slightly again. Spread is currently 1.7bp tighter at 71.3bps.

-June Gilt future reversed small losses and ticks to fresh session highs

following lower than expected rise in UK service PMI and EMU CPI. G M8 last 29

ticks higher at 121.20.

- Fairly muted reaction in US Tsys to FOMC yesterday though 2s10s curve is

flattening slightly as 10s outperform, yields down 1.5bps to 2.9514%.

- JGBs market closed today for holiday.