Most core bond price action has been....>

EGB SUMMARY: Most core bond price action has been driven by hopes that a Sino-US

trade war can be averted. The entire UST yield has risen 3bp in yield between

2-30Y and the Bund 10Y is +1.8bp at 0.545%.

- WSJ article reported that China and US are quietly seeking a solution. Other

newswires have added their own twist to this.

- Italy sold 2.9bln of a new 2Y CTZ and 2.5bln of a new BTPei 0.1% May-23.

Bidding was fairly average even though there is a CTZ maturing this week.

- French data showed that the 2017 budget deficit came in well below

expectations at 2.6% of GDP. 

- ECB hawk Weidmann said "Markets expect a first hike in interest rates at about

the middle of next year, that is probably not unrealistic".

- Spanish debt is outperforming all other markets following an upgrade by S&P

after the close on Friday. The rating hike potential was heavily traded last

week and the Bund-Bonos 10Y spread is 2bp tighter today at 172.4bp. However BTPs

are 2bp wider to Germany as Northern League and M5S sit have said that they will

sit down for coalition talks.