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Overnight steepener


Extending small gains


Put spread trades again

BOND SUMMARY: It has been a relatively quiet session so far with a light
dataflow out of Europe.
- The Italian sovereign curve continues to steepen, driven by the long end. The
2s10s spread has widened to 173.8bps from a morning low 162.29bps. At the very
long end, the benchmark 30-year BTP yield has edged up to 3.344% from 3.317% at
the open.
- The advance in US Tsy yields has taken a breather. The benchmark 2-year yield
has dropped to 2.508% from a recent high of 2.516% on June 4, while the 10-year
is down to 2.931% from yesterday's high of 2.944%. There has been little
movement in 2s10s, which is currently hovering around 42bps.
- Gilt yields have been pushing higher, spurred on by a stronger than expected
Services PMI print. The 2-year yield is trading at 0.680% around session highs,
while the 10-year is trading at 1.314% from 1.292% at the open.
- The front of the short sterling strip has sold off with Whites down 1.5-3.0
ticks, while EURIBOR futures have nudged higher by 0.5-1.0 ticks.