China's decision to institute a new....>

BOND SUMMARY: China's decision to institute a new security law for Hong Kong has

dominated the narrative this morning. While oil has pushed sharply lower and

equities have made fresh losses, price action in govvies has been relatively

contained.

- USTs have rallied with the curve bull flattening. The 2s30s spread is 3bp

lower, while TYM0 trades at 139.09 and towards the top end of the morning range.

- BoE Deputy Governor Dave Ramsden earlier stated that it is possible that the

Bank will deliver more QE at the June meeting and that it is reasonable to have

an open mind on negative rates. This follows recent comments from Governor

Bailey who said it was 'foolish' to rule out negative rates.

- Gilts are slightly bid and the curve a touch flatter. Cash yields are 1-2bp

lower, while the Jun-20 gilt future trades at 138.74 up 27 ticks from the close.

- Bunds now trade close to unch on the day. Current yield levels: 2-year

-0.6973%, 5-year -0.6878%, 10-year -0.4998%, 30-year -0.0664%.

- BTPs sold off earlier in the session and have subsequently clawed back some

losses. Short-end yields remain a touch above yesterday's close.