There has been a distinctive risk......>

BOND SUMMARY: There has been a distinctive risk off pivot in govies this morning

with sharp bull flattening of core sovereign curves alongside a selloff in the

Eurozone periphery. 

- USTs have been bid with the long-end outperforming. 20- and 30-year yields are

now 6bp lower on the day while the 2s30s spread is 5bp narrower.

- Gilts have similarly rallied, but have lagged USTs. Cash yields are broadly

2-3bp lower with the curve flat overall.

- Flattening has been more pronounced for the bund curve with the 2s30s spread

trading down 4bp.

- BTPs have trading weaker with the shorter end underperforming. Yields in the

1- to 10-year bucket are up 2-3bp on the day.

- Italy sold a combined E10bn of 12-month and flexible BOTs which concludes

Eurozone government bond and bill supply for the week.

- US PPI data for June will be published this afternoon although is typically

not market moving. Canadian labour market data for June will be more closely

watched.