Further deterioration in US-China......>

BOND SUMMARY: Further deterioration in US-China trade talks have been the major

talking point for markets this morning. President Trump announced last week that

he would be putting an additional 10% tariff on remaining imports from China

that were not already covered by the 25% tariff. The PBOC cited the trade talks

as the reason for USDCNY rising above 7.

- Core bonds have rallied on the back of these developments this morning with

futures up 0-29+ today at 129-25, Bund futures are up 0.54 at 176.36 and gilt

futures are up 0.77 today at 134.26. Bund and gilts are both seeing yields fall

further into record low territory with the whole German curve moving more

negative while 10y gilts are now yielding below 0.50%.

- Services PMIs across the Eurozone and UK have generally seen small positive

surprises (except Germany which saw a downward revision) while the key data

coming up in the US session will be the ISM non-manufacturing data.