Bonds are trading modestly weaker......>

BOND SUMMARY: Bonds are trading modestly weaker led by sharp full in BTPs but

with the exception of Gilts which are mixed.

- Tsys remain under pressure, with the 10-Yr at 2.853%, up 1.5bps falling from

US session highs following recovering in US Dollar overnight. Curve is bear

steepening, with the long-end mildly underperforming (2-Yr up 0.5bps; 30-Yr up

1.6bps). Volumes have been decent for a quiet Friday.

- German Bunds are now trading modestly lower having reversed opening risk-off 

move higher. The 10-yr yield is 0.7bp higher at 0.337% vs low of 0.313%, with

markets now looking for next directional move.

- BTPs came under the heavy selling pressure at start of London trade as Italy

political uncertainty returned once again, this time on rumours that Fin Min

Tria was asked to resign, however these have just been denied BTPS have pared

some of those losses. 10-yr BTP is +3.9bp at 2.545% vs high of 2.583%

- Gilts are mixed with the short-end underperforming the long/ultra long-end of

the curve and in-turn flattening the yield curve, 10-yr unchanged at 1.186%.

- Euribor & Euro$ futures are steady to -1.5 ticks but Sstg steady to +1 tick