EGBs/GILTs: European govvies have......>

BOND SUMMARY: EGBs/GILTs: European govvies have rallied this morning on the back

of extremely bleak PMI data out of the Eurozone and the UK. The services sector

has been particularly hard hit with Germany printing 17.1 in April

(preliminary), France 10.4, the Eurozone 11.7 and the UK 12.3. Given the

relatively stronger German number, the weak Eurozone aggregate reading suggests

that the Italian and Spanish PMIs for April (not yet published) could even be

below 10. 

- The gilt curve has bull flattened with the 2s30s spread narrowing 4bp on the

day.

- Bunds trade firm with yield 1-3bp lower. Current yield levels: 2-year -0.712%,

5-year -0.626%, 10-year -0.418%, 30-year -0.025%.

- OATs have outperformed bunds with yields 4-6bp lower and the curve bull

steepening. 

- BTPs have outperformed the big four with the short-end leading the charge.

2-/3-year yields are down 10-11bp on the day.