Sovereign bonds have dropped from......>

BOND SUMMARY: Sovereign bonds have dropped from session highs following German

IFO expectations component surprising to the upside, but remain underpinned by

heightened US/China trade rhetoric albeit in light volume. Yield curves though

are mixed. 

- US Treasuries squeezed higher during Asia, supported by newswire report that

US administration has decided to restrict China's ability to invest in or

acquire US companies in the industries identified by Beijing in its so-called

Made in China 2025 plan. 10-yr Tsy yield is 2bp lower at 2.875% vs low of

2.864%, with 5s/30s spread 1.1bp steeper .

- In Europe German yield curve has flattened with 2s/30s 2.5bp tighter while

10-yr yield is 1.5bp lower at 0.322% vs intra-day low of 0.304%. While EMU

periphery have unperformed with 10-yr Bund/BTP spread 11.3bp wider at 247.1bps.

The expectations component of the IFO survey was steady at 98.6.

- Gilts are tracking Tsy more closely than Bunds with yield curve pivoting

around the 10-yr sector. Domestic politics seen also influencing UK markets.

10-yr Gilt yield last -2bp at 1.29% vs low of 1.265%.