With Korean peninsular tension..........>

EGB SUMMARY: With Korean peninsular tension easing, the risk-on approach gained

further momentum overnight. Treasuries softened, yen weaker, gold down and

everything else that would push EGBs lower at the open.

- Soon after the open, the euro suddenly gave way versus the dollar and

technical selling developed. Initially, the Bund market rallied because these

are the (weak) co-movements that normally exist. However, it was clear that no

fundamental news sat behind the currency move and so the spillover onto Bunds

waned slightly.

- Q2 GDP from Germany printed a tenth below consensus at 0.6%Q/Q growth but

there was a nullifying tenth of a percent upward revision to Q1 GDP. 

- At present, the Bund yield is 2bp higher at 0.424%

- Today will be very thin trading conditions with Assumption Day holidays in:

Austria, Belgium, France, Greece, Italy, Poland, Portugal, Slovenia and Spain.

Catholic parts of Germany and Switzerland observe the holiday.

- There is no supply from bond or bill markets in the Eurozone.