Core bonds have been on the rise.......>

BOND SUMMARY: Core bonds have been on the rise through the European morning

session as data has confirmed that the German economy contracted in the second

quarter.

- Bunds have underperformed USTs this morning but Bund futures have made new

highs (Bund cash yields making record lows).

- USTs have retraced over half of their peak to trough losses of yesterday while

gilts are trading close to levels seen when the US-China tariff news hit the

wires yesterday.

- BTP-Bund spreads are marginally wider on the day. Yesterday it was confirmed

that Conte would appear before the Senate on August 20 and potentially face a

confidence vote. Salvini has also confirmed that he would appoint Giancarlo

Giorgetti as FinMin.

- UK CPI data came in stronger than expected, rising to 2.1%Y/ Y (exp 1.9%) but

with the BoE's actions conditional on Brexit there was little market reaction.

- TY1 futures are up 0-7 today at 130-01+ with Bund futures up 0.26 at 177.94

and Gilt futures up 0.19 at 134.49.