Bond markets have broadly started on...>

BOND SUMMARY: Bond markets have broadly started on the front foot with the

exception of longer-dated US Tsys, with Italian bonds outperforming.

- The US Tsy curve is steeper: 2-Yr yields down 0.2bps after touching fresh

cycle highs above 2.605% Monday, but 10-Yr up 0.4bps at 2.862%.

- Attention set to turn to Q&A section of Fed Chair Powell's semi-annual

monetary policy report due Tuesday & Wednesday.

- The Bund curve is flatter with 2-Yr yields up 0.4bps and downward moves in

5-Yr (0.2bps), 10-Yr (0.2bps), and 30-Yr (0.3bps). 2-Yr auction eyed shortly.

- Italian BTP spreads have compressed sharply, with the differential to Bunds

coming in 6.6bps on the 2-Yr and 5.4bps on the 10-Yr, both hitting post-May

lows. No real catalyst, though analysts citing the `summer carry trade`.

- Rate futures are flat-to-higher. The biggest movers are in Short Sterling,

with Green and Blue contracts up 1-2 ticks on light volume.

- But overall little reaction to UK labour data that largely came in line with

expectations. Sep8 Gilt future fell 11 ticks, but up 15 on the day at 123.12.

- JGBs have stuck to a tight range, Sep future up 1 tick at 150.91.