Bunds rallied throughout the day,.......>

EGB SUMMARY: Bunds rallied throughout the day, handily outperforming Tsys and

semi-core EGBs, and the 10-Yr yield reaching lowest levels since May. 

- Move into safe-havens accelerated in the European morning on US-China

diplomatic tensions. European equities have recovered some losses from the lows

but down on the day (not helped by weaker Bank stocks, with various sources

stories on the wires saying the ECB would discourage bank dividend payments).

- Issuance concluded for the week uneventfully: Portugal had a solid sale of M-T

PGBs; German 2048 auction went well enough (steady cover ratios vs last sale).

- Minimal data / speaker newsflow; Lagarde in an online interview said the mix

of grants and loans in the EU fiscal deal was 'reasonable', said that ECB's

baseline forecasts are in the right place. ** Latest levels:

* Sep Bund futures (RX) up 53 ticks at 176.9 (L: 176.2 / H: 176.94)

* Germany: The 2-Yr yield is down 2bps at -0.69%, 5-Yr is down 3.4bps at

-0.691%, 10-Yr is down 3.4bps at -0.494%, and 30-Yr is down 4.1bps at -0.064%.

* Sep BTP futures (IK) up 55 ticks at 146.46 (L: 145.8 / H: 146.62)

* Italy / German 10-Yr spread 2bps tighter at 153.4bps