Heading into this week's ECB...........>

BOND SUMMARY: Heading into this week's ECB meeting, with markets looking for an

expansion of the PEPP purchase capacity, periphery-core spreads have narrowed. 

- Italy has led the charge with BTP yields 2-5bp lower and the curve bull

steepening. The 10-year BTP-bund spread has narrowed to 193bp from 196bp at the

start of the session.

- The bund curve has steepened, underpinned by some selling pressure at the

longer end. The 30-year benchmark yield is up 4bp.

- OATs have sold off across the curve with cash yields 1-4bp higher.

- Price action in gilts has been contained with yields unch to 1bp higher on the

day.

- It has been relatively quiet on the data front this morning with the final May

PMI prints being the main release. Most came in line with consensus, with the

notable exception of the Italian manufacturing PMI which surprised higher (45.4

vs 36.8 survey). Focus shifts to the US & Canadian manufacturing PMIs and the

ISM manufacturing report later today.