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EGB/GILT: Core European government.....>

BOND SUMMARY: EGB/GILT: Core European government bonds have traded firmer this
morning with core EGB curves bull flattening alongside modest gains for
- Gilts have trade firmer with the curve close to flat. Current yield levels:
2-year -0.1193%, 5-year -0.0814%, 10-year 0.1432%, 30-year 0.6247%.
- The bund curve has bull flattened with the 2s30s spread trading down 3bp.
- The OAT curve has similarly outperformed at the longer end with cash yields
broadly 1-3bp lower.
- The BTP curve has twisted with 1- to 7-year issues trading weaker and the
remainder of the curve firming.
- Further fuelling uncertainty about the shape of the economic recovery, May
industrial production data surprised sharply to the upside for Italy (42.1% M/M
vs 24.0% survey) and (to a less extent) France (19.6% M/M vs 15.4% survey).
- Supply this morning came from the UK (bills, GBP8bn) and Italy (BOTS,

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