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

EGBS: Core/Semi-core European government bonds have opened on the back foot

weighed by return of risk-on sentiment as markets digest news that china is

sending a delegation to Washington for trade talks in late August and reports

that BoJ may allow yields to rise higher. German 10-yr yield is 1bp higher at

0.314% with curve steepening slightly as short-end yield rises circa 0.3bp.

- EMU periphery had opened with a positive tone, supported by the risk-on flows

seen overnight, however, are paring gains as I write as political/budget

concerns remain. 10-yr Bund/BTP spread is now 1.5bp tighter at 285bps having

been as low as 280.5bps.

- Once again little Eurozone data today, so attention will remain on

geo-political events in Turkey, China and Italy. Uk and US data will also be

eyed.

- Euribor futures are steady to 1 tick lower with the strip slightly steeper as

blue contracts underperform whites.