PMIs have been the dominant driver of...>

EGB SUMMARY: PMIs have been the dominant driver of EGBs today with very

disappointing manufacturing prints from Germany, France and the pan-Eurozone

print and disappointing details to compound the pessimism.

- The German curve has bull flattened, with 10y Bund yields down 1.8bps at

writing.

- Peripheral spreads have tightened on the back of the poor data, as higher

expectations of ECB QE are priced into the market.

- Tomorrow's ECB meeting is expected to see forward guidance changed to indicate

that the ECB could cut the deposit rate, but few are expecting a major policy

change with tomorrow's meeting setting up the September decision.

- Bund 10y yields down -1.8bp today at -0.374%

- Schatz yields down -0.3bp today at -0.785%

- OAT 10y yields down -2.1bp today at -0.112%

- BTP 10y yields down -8.9bp today at 1.512%