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European curves bull flattened Monday.

• The EGB / Gilt rally started overnight following a weekend Bloomberg report that the EU was set to formulate a plan to retaliate against the US in case of a "no deal" scenario on tariffs by the White House-set Aug 1 deadline.
• This followed Friday's FT report that US President Trump was seeking a minimum 15-20% EU tariff.
• Indeed the trade conflict appeared to be a broader undercurrent, with some anticipation of the swiftly-approaching Aug 1 date more broadly boosting long-end FI and weakening the USD (although a rise in equities appeared to be an outlier in this move).
• Helping the bullish move follow through in mid-afternoon was a well-received BoE long-end  APF sale which saw bull flattening extend.
• Carrying on from last week's trend, Gilts underperformed, but both the UK and German curves bull flattened on the day.
• Periphery and semi-core EGB spreads tightened, with 10Y OAT/Bund down more than 2bp.
• This week's calendar highlights include flash PMIs and of course the ECB decision Thursday - our preview of the latter will be out Tuesday.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 4.6bps at 1.824%, 5-Yr is down 7.2bps at 2.168%, 10-Yr is down 8.2bps at 2.613%, and 30-Yr is down 9.3bps at 3.139%.
• UK: The 2-Yr yield is down 3.3bps at 3.869%, 5-Yr is down 5.4bps at 4.035%, 10-Yr is down 7.1bps at 4.603%, and 30-Yr is down 8.3bps at 5.428%.
• Italian BTP spread down 1.8bps at 83.7bps / French OAT down 2.5bps at 67.9bps  

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