EGB/GILT: European sovereign bond......>

BOND SUMMARY: EGB/GILT: European sovereign bond curves have bear steepened this

morning, while equities have broadly traded weaker and oil has rallied.

- Gilts have sold off sharply with yields at the longer end 4-5bp higher on the

day. The 2s102 spread has widened 3bp.

- Bunds have similarly been offered with cash yields 3-4bp higher across the

curve. The Sep-20 bund future is trading at 175.67, 7 ticks off the day's low.

- OATs have marginally underperformed, particularly at the very long end.

- BTPs have fared somewhat better with cash yields 1-2bp higher.

- Supply this morning came from the UK(Gilts, GBP5.25bn) and Greece (Bills,

EUR812.5mn). Portugal is also syndicating an Oct-35 bond with order books last

seen above EUR40bn.

- Data published earlier in the session showed a rapid rebound in German retail

sales for May (13.9% M/M vs 3.5% survey), mirroring similar developments in the

US and UK in recent weeks. More importantly, German unemployment claims for June

came in well below expectations (69.0k vs 120k survey).