After moving higher on the back of.....>

BOND SUMMARY: After moving higher on the back of the ECB announcement and press

conference yesterday, USTs and Bunds have held on to their gains overnight and

through early European trading. TY1 is up 0.016 on the day at 122.67 while RXM9

is up 0.09 at 164.64. Weak Chinese export data overnight has helped to keep

bonds on the front foot.

- However the shape of the UST and German curves has diverged. The UST curve has

bull steepened with 2y yields down 1.0bp on the day at 2.463% but 10y yields

down 0.5bp at 2.634%. The German curve has flattened with Schatz yields up 0.2bp

to -0.545% and 10y Bund yields are down 1.3bp at 0.054%.

- Gilts are largely unchanged with futures down 0.17 at 124.20, 2y yields 0.3bp

higher at 0.736% and 10y yields 0.4bp higher at 1.177%.

- EGB peripheral spreads have retraced some of their tightening yesterday while

semi-core spreads are largely unch to a little tighter today.

- European data has been mixed with upside surprises to Italian, French and

Spanish IP but German factory orders disappointing. The highlight for the day

ahead will be the release of the US employment report at 13:30GMT.