Bund and Treasury futures are off......>

BOND SUMMARY: Bund and Treasury futures are off their highs seen in the Asian

session as markets continue to digest yesterday's surprise 50bp Fed cut and

equities have moved a little higher today.

- Attention is turning to whether the UK respond. 10-year gilt yields have

broken through record low levels and 2y gilts are outperforming 2y Treasuries.

There has been much focus on whether the BoE will cut rates as soon as this

week, with Nomura's UK economist looking for an intermeeting cut this week. As

we noted yesterday, it is easier for the BOE to respond quickly than the ECB.

- TY1 futures are up 0-16+ today at 136-08+ with 10y UST yields down -5.6bp at

0.945% and 2y yields down -4.4bp at 0.658%. We note that 30y TIPS are currently

trading with a negative real yield, having broken below zero for the first time

every yesterday.

- Bund futures are up 0.03 today at 177.77 with 10y Bund yields down -0.4bp at

-0.631% and Schatz yields down -0.3bp at -0.821%.

- Gilt futures are up 0.57 today at 136.49 with 10y yields down -4.8bp at 0.340%

and 2y yields down -4.8bp at 0.176%.