It has been a steady start in the.......>

EGB SUMMARY: It has been a steady start in the European Government Bond markets

with the 10-year Bund future little changed having traded in a tight 19 tick

range so far Tuesday. German 10-year yield is 0.3bp higher at 0.546%.

- There was little direction seen overnight with US Treasuries slightly weaker

despite the latest political turmoil at the White House. While the RBA decided

to leave rates unchanged as expected but pointed to strong AUD that could weigh

on the economy and inflation.

- EMU periphery are once again trading modestly better than Bunds with 10-year

spreads between 0.5bp and 1.5bp tighter as large redemptions continue to

underpin demand. 

- Front end of Germany is holding up well so far ahead of 2-year Schatz

re-opening auction for E4bln.

- Markets also looking ahead to Eurozone final manufacturing PMI at 0800GMT and

then EMU flash Q2 GDP at 0900GMT. Consensus forecast is for Q2 GDP to remain at

0.6% q/q, matching the growth in Q1, however some seen upside risk following

strong numbers from France and Spain.