Geopolitical risk has ticked up........>

BOND SUMMARY: Geopolitical risk has ticked up after the US provided video

footage purportedly showing that Iran was involved in the attack on a oil tanker

in the Gulf of Oman. However, the oil rally was quickly drowned out by warnings

from the International Energy Agency that oil supply will swamp demand in 2020.

- The flare up in political risk and shifting Fed expectations have kept USTs

bid. Yields are 3-4bp lower. TYU9 trades 127-19+, near the top of the morning

range.

- UK Conservative leader frontrunner Boris Johnson is facing mounting pressure

to take part in a televised debate with the other contenders. Taking part or

abstaining carries risk and his decision could prove pivotal for his campaign.

Gilts are a touch firmer this morning.

- Bunds have rallied and the curve has bull flattened. Current yield levels:

2-year -0.703%, 5-year -0.618%, 10-year -0.269%, 30-year 0.312%. 

- BTPs have rallied with yields 4-5bp lower. The 2-year benchmark is

outperforming the curve.

- Euro$ futures are 1.0-4.0 ticks higher; Euribor futures are up 1.5-2.5 ticks.