Bonds are on the front foot this.......>

BOND SUMMARY: Bonds are on the front foot this morning. Headlines suggesting

North Korea could be on the brink of a missile launch and continued uncertainty

over Brexit have led to a risk-off feeling in fixed income markets, despite

European equity markets trading with a mixed tone.

- TY1 is up 0-06 this morning at 125-25+ with 2y UST yields down 3.6bp to 2.296%

and 10y yields down 3.0bp to 2.471%. However in context, these moves are only

partial retracements of the moves seen yesterday following the better than

expected ISM manufacturing report.

- Bund futures are up 0.23 at 165.89 this morning with 10y Bund yields down

1.1bp to -0.039% and Schatz yields down 0.3bp to -0.611%. Peripheral spreads are

within 1bp of yesterday's close.

- Gilt futures are up 0.25 to 129.11 with 10y yields down 3.2bp to 1.014% and 2y

yields down 3.4bp to 0.625%.

- Focus for the rest of the day will be on further UK political developments

with the UK cabinet meeting this morning while the highlight on the data

calendar will be US durable goods orders for February.