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Markets are mildly risk-off this morning with core sovereign bonds rallying, European equities trading a touch weaker and the dollar posting gains against most G10 currencies.

  • Eurozone flash PMI data for August broadly disappointed, with French manufacturing being particularly noteworthy for sliding back into contractionary territory. Meanwhile, UK PMI data beat expectations (Composite: 60.3 vs 56.9 survey) as did retail sales for July. However, the CBI Trends Total Orders print came in below expectations.
  • The Sep-20 gilt future trades at 137.17, towards the top of the morning range (L: 13686 / H: 137.18).
  • Bund cash yields are ~1bp lower across the curve, which trade close to flat overall.
  • OAT yields are now close to unch on the day. Last yields: 2-year -0.6350%, 5-year -05744%, 10-year -0.2074%, 30-year.
  • BTPs are slightly weaker and similarly trade in line with yesterday's closing levels.
  • Supply this morning came from the UK (Bills, GBP2.25bn)
  • Focus now shifts to the US flash PMIs for August which are out later today.
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