Newsflow and dataflow have been light...>

EGB SUMMARY: Newsflow and dataflow have been light so far. IB analysts are

ramping up calls for ECB policy easing, with SogGen expecting a 10bp cut to the

deposit rate in September and UBS pencilling in two 10bp cuts at the same

meeting.

- Bunds have rallied this morning and the curve has flattened. Current yield

levels: 2-year -0.741%, 5-year -0.587%, 10-year -0.2297%, 30-year 0.362%. The

2s10s and 2s30s spreads are ~2bp narrower on the day.

- The French OAT curve has similarly bull flattened with the 10-year benchmark

outperforming.

- BTPs are the big mover on the morning following indications from Deputy PM

Matteo Salivini that a snap election in September is not on the cards. BTP

yields are 3-5bp lower.

- Spanish bonds are similarly trading firm with the 3-year benchmark leading the

charge. The market seems to have shrugged off the uptick in political risk

resulting from Podemos' decision to halt negotiations to support acting PM Pedro

Sanchez - raising the possibility of a snap election.