US Treasuries have rallied with.....>

US TSYS SUMMARY: US Treasuries have rallied with higher during the European

morning session, underpinned by risk-off sentiment on a combination of Italian

political concerns, a renewal of US-China trade tensions, weak data, and

emerging market assets under pressure. 10-yr Tsy yield is -5.1bp at 3.008%

- The 5-yr and 7-yr part of the yield curve has led the rally, leading to 2s5s

flattening by 3.5bps to 29.1bps, and 5s30s steepening by 1.5bps to 32.2bps.

- In Asia US Tsys edged higher in the main, as risk off trade dominated the

Asia-Pacific session on US/China trade differences and that talk of US summit

with North Korean leader Kim Jung-Un might be delayed.

- Tsys got a further boost once European session got under way, first supported

by a block buy in TYM8 for 5k and then following soft flash PMI data from

France, German and the Eurozone overall. Sharp fall in Italy BTPs and the

Turkish Lira also added to flight-to-quality bid.

- Eurodollar strip has flattened as blue contracts rally 6.5 to 7 ticks higher,

but white contracts are not too far behind, up 0.25 to 3.5 ticks.

- Main events later included 5-yr Tsy auction and release of FOMC minutes