European government bond trading.......>

BOND SUMMARY: European government bond trading Monday has been very lacklustre

due to May-Day holiday in the UK with volumes way down in future space. What

trading there has been has mainly been buying in the long-end end of the curve

with EGBs squeezing higher throughout the morning, supported by surprise fall in

German factory orders for March.

- German 10-yr bund yield is 1.1bp lower at 0.533% with 2s/10s and 2s/30s

spreads circa 0.7bp tighter.

- EMU periphery are performing slightly better than bunds with Bund/BTP spread

1.1bp tighter at 124.1bps on renewed hope of a government being formed.

- US Tsy T-note future has traded in a very tight range of between 119-19+ to

119-23 with little in the way of major news flow from over the weekend giving

traders little to go off. US 10-yr yield is 0.6bp higher at 2.9553%.

- JGBs operated in an orderly fashion, following the extended holiday weekend,

but have just come under some selling pressure. Futures traded 4 ticks higher to

150.88 before slipping lower to 150.83 in London, while 40-Year paper

underperformed in cash dealing as the curve underwent some modest steepening