Gilts and EGBs are on the front foot...>

BOND SUMMARY: Gilts and EGBs are on the front foot this morning. With little of

note on the data calendar, political events are likely to be the drivers today.

- In the UK, Theresa May is meeting the executive of the 1922 Committee with

headlines suggesting that she will be strongly encouraged to set out a timeline

for her departure. It is suggested that if she does not do this willingly, Party

rules will be looked at again to force her hand with a confidence vote mooted

for the week of June 10.

- Headline risk remains for EGBs, particularly surrounding the Italian deficit.

- Gilt futures are up 0.41 today at 129.00 with 10y yields down -3.4bp at 1.033%

and 2y yields down -2.6bp at 0.678%.

- Bund futures are up 0.31 today at 167.25 with 10y Bund yields down -2.1bp at

-0.120% and Schatz yields down -0.7bp at -0.664%.

- BTP futures are up 0.16 today at 129.26 with 10y yields down -2.8bp at 2.718%

and 2y yields down -3.6bp at 0.700%.

- OAT futures are up 0.34 today at 163.34. France will issue nominal bonds and

linkers today (see 7:46BST).