It has been a rather subdued European...>

EGB SUMMARY: It has been a rather subdued European morning trading session with

the Bund future trading in a tight 23 tick range despite the safe-haven flow

seen overnight in Asia on the back of trade war rhetoric and announcement of Lt.

Gen. McMaster resignation. German 10-yr Bund is currently trading close to

session lows as NY traders get to their desks. Yield is 0.2bp higher at 0.531%

with yield curve little changed.

- The European bond markets did not appear too concerned about the sharp

sell-off in Asian equities and the prospect of a trade war, as China slapped

$3bln worth of tariffs on US imports was seen as a mild reaction to the US

decision to impose $60bln worth of tariffs. 

- Views in bonds seems to be that any trade war is likely to lead to higher

prices and therefore rise in inflation and prospect of higher interest rates.

- EGB periphery came under a little selling pressure first thing but have since

stabilised to be in the region of 1bp wider in 10-yr sector vs Bunds. Curves are

bear steepening though.

- Focus in now on raft of Fed speakers and US data.