Some paring of risk leading up to......>

BOND SUMMARY: Some paring of risk leading up to the UK and US holiday weekend,

with Italian 10Y BTP spreads over German Bunds trading at a new 2018 high of

202.1bps. Saw a large BTP futures block (3.4k IKM8 @ 131.30) at 0818:57BST which

probably explains a sell-off seen at around 8am London time. Spread has since

settled to 198.1bps, with BTPs recovering a few ticks and Bunds steadying.

- Spanish Bonos largely unfazed by news of a no-confidence vote from the

Socialists against the Rajoy government, with prevailing sentiment that there is

insufficient parliamentary support for such a motion. Bonos/Bunds spread trading

0.5bps narrower, vs Italy's 4.2bps widening.

- The short sterling futures strip looks strong amid UK Q1 GDP data which showed

the worst business investment growth since Q315, with Red, Green and Blue

contracts up 2-3 ticks today. Jun18 gilt futures up 18 ticks at 122.86.

- 10Y UST yields are down 3.6bps, and at 2.972% at last check are just 0.7bps

off the lows. Due later up today are US Durable Goods (1230GMT) & Michigan

Sentiment (1400GMT), plus multiple Fed speakers at an event in Dallas.

- JGBs Futures last trading at 150.92, 9 ticks higher.