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EGB/GILT

BOND SUMMARY

European govies have shifted to a risk-off posture this morning as global risk

sentiment is undermined by simmering US-China tensions and concerns about

the European tourism industry (and broader recovery) as the risk of fresh

travel bans rises.

- Gilts are bid with cash yields broadly 2bp lower on the day and the curve

trading close to flat overall.

- The bund curve has bull flattened with the 2s30s spread 4bp narrower.

- OATs trade in line with bunds. Last yields: 2-year -0.6258% ,

5-year -0.534%, 10-year -0.1746%, 30-year 0.5261%.

- BTPs have traded weaker with cash yields up ~1bp.

- The Business Climate and Expectations component of the Germany IFO for July
came in above expectations.

- Supply this morning came from Germany (Bubills, EUR3.58bn), the Netherlands

(DTCs, EUR3.3bn) and Belgiumn (OLOs, EUR2.008bn)

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