Disappointing German and French industrial.....>

EGBS: Disappointing German and French industrial production data couple with

overnight trade war barbs within the G7 have supported sharp move higher in

core/semi-core European government bonds this morning. German 10-yr Bund yield

is 4.5bp lower at 0.439% with the curve bull flattening slightly as 2-yr yield

falls 2.3bp.

- German industrial production for April declined 1.0% versus expectations of a

rise of 0.3%, while in France it declined 0.5% on the month, also below

consensus for a 0.3% rise.

- While Trump seams to be upsetting the G7 apple cart complaining that France

and Canada charge the US "massive tariffs" and have non-monetary barriers to

trade.

- Short end of BTP curve is getting hit hard once again, (2-yr +14bps) with

traders citing MNI interview with Claudio Borghi, economic adviser for Italy's

Lega party. Borghi said that the ECB should guarantee the sovereign debt of all

member states and introduce sustainable spread caps. 

- Main event today will be start of G7 summit in Charlevoix, Quebec later.