Overnight headlines that the US and....>

BOND SUMMARY: Overnight headlines that the US and China are close to reaching a

trade deal have seen global bond markets sell off. Better than expected Chinese

and European services PMIs also contributed as did growing hopes for a softer

Brexit as PM May starts talks with Labour leader Corbyn today. Most of the moves

happened through the Asian or early European session. Eurozone services PMIs

come in better than expected but UK service PMI disappoint and fall to 48.9.

- TY1 futures are down 0-09 on the day at 123-15+ with 10y UST yields up 3.9bp

to 2.513% and 2y yields up 2.6bp to 2.329%.

- Bund futures are down 0.69 to 165.42 with 10y Bund yields up 3.6bp to -0.003%

(yields turned positive briefly earlier). Schatz yields are up 1.8bp to -0.591%.

Peripheral spreads have narrowed significantly this morning with GGB-Bund

spreads 8bp narrower and BTP-Bund spreads 7.7bp narrower.

- Gilt futures are down 0.78 to 128.55 with 2y yields up 3.5bp to 0.668% and 10y

yields up 6.5bp to 1.069%.

- Much of the sterling strip is 6-7.5 ticks lower with Euribor and Eurodollar

futures down 2.5-4 ticks.