The focus is on Turkey this morning,...>

BOND SUMMARY: The focus is on Turkey this morning, with reports that the ECB is

concerned about exposure among EU banks.

- US treasuries have rallied, with the benchmark 10-year yield down to 2.8895%

from a high of 2.9276%. The curve has flattened with the 2s10s spread narrowing

to 24.5bps from a high of 27.4bps.

-  Outperformance at the long end of the bund curve has caused the curve to

steepen. The 10-year benchmark trades at 0.334% from 0.365% at the open, while

the 30-year yield has pushed down to 0.999% from 1.029%.

- French OATs have rallied across the curve. The 2-year yield has traded down to

-0.457% from a high of -0.436% while the 10-year is down to 0.676% from 0.698%.

- The Italian BTP market has been rocked by comments from Deputy PM Di Maio on

scrapping the balanced budget clause in the constitution at some point in the

future. No strong direction overall.

-  Relatively tight trading in gilts up to the 10-year. The 30-year yield has

edged higher to 1.724% from a low of 1.712.

- Euro$ futures up 1.5-4.5 ticks, Euribor futures greens/blues up 1.5-4.0 ticks