Negative headlines stall downward pressure

A very subdued start to the European session, with core fixed income marginally lower than yesterday's close.

• Yesterday saw a decent move lower as quarter-end rebalancing took effect.
• The morning session has been dominated by negative political headlines, although the moves in fixed income have been much smaller than in FX. A Reuters story suggested that negotiations were stalling on state aid rules (which has been reported by other press but still added to negative sentiment). While RTE have reported that the EU will announce that it is beginning legal procedures against the UK with respect to the Internal Market bill this morning (again this was expected but perhaps not this week as formal Brexit negotiations continue).
• European PMIs were largely uneventful (in line with consensus and flash prints) and the focus will be on the US ISM manufacturing later today. We also have comments from ECB's Lane and Fed's Williams due up.
• TY1 futures are down -0-3 today at 139-14 with 10y UST yields up 1.0bp at 0.695% and 2y yields down -0.3bp at 0.126%.
• Bund futures are down -0.07 today at 174.45 with 10y Bund yields up 0.1bp at -0.522% and Schatz yields up 0.1bp at -0.704%.
• Gilt futures are down -0.08 today at 136.03 with 10y yields down -0.3bp at 0.225% and 2y yields down -1.7bp at -0.44%.