It has been a fairly quiet start to....>

BOND SUMMARY: It has been a fairly quiet start to European morning session for

core fixed income with USTs, Bunds and gilts all trading a little softer, giving

back some of yesterday's gains.

- The main story of the morning has been the move in BTPs, with BTP-Bund spreads

tightening this morning on the back of a story in La Repubblica that PM Conte

may be near an agreement with Brussels to delay the decision on EDP until the

autumn. At the time of writing 10y BTP-Bund spreads were 5.6bp tighter on the

day.

- The morning has also seen the release of inflation data from France, Italy and

the Eurozone. French and Italian data were both a bit firmer than expected but

the headline Eurozone print was in line with expectations at 1.2%, although core

surprised a tenth to the upside at 1.1%Y/Y. Later today, US personal

income/spending, the MNI Chicago PMI and Michigan confidence data are all due

for release.

- TY1 futures are down -0-5+ today at 127-24+ with Bund futures down -0.04 at

172.58 and Gilt futures down -0.05 today at 130.41.