Core/Semi-core European government bonds.......>

EGBS: Core/Semi-core European government bonds have reversed opening gains and

are now modestly lower on the day as markets digest latest movements in the

Turkish Lira which at one point dropped to 7.23 vs US Dollar but now trades at

6.65. German 10-yr yield is 0.3bp lower at 0.314% with curve ever so slightly

bull steepening as short-end outperforms the the long end.

- EMU periphery bonds are under heavy selling pressure this morning as risk-off

sentiment continues. Newswire reports comments from Di Maio saying that Italy is

not exposed to speculators' attacks which markets gladly tried to prove

otherwise. The short end of the BTP curve has come under particular heavy

selling pressure with 2-yr yield currently 12.5bp wider at 1.29% after hitting a

high of 1.344%. 10-yr Bund/BTP spread is 6.6bp wider and Bund/Bono spread 2bp

wider.

- There is little data from the Eurozone today so attention will remain on Italy

and fluctuations in the Turkish Lira.

- Euribor futures are currently mixed with white contracts steady to 0.5 tick

higher while greens and blues are 0.5 to 1 tick higher