A bad say for EGB investors on..........>

EGB SUMMARY: A bad say for EGB investors on Wednesday although Gilts suffered

more. The 10Y Bund yield headed into the close at 0.386%, a rise of 4.7bp. 

- Reasons for the move included hopes that a Brexit Bill has been agreed,

stronger-than-expected German inflation, increased likelihood that the US Senate

might pass the Republican tax plan and a capitulation of stop-losses.

- Within Europe, the German market suffered to a greater degree than other

jurisdictions. Portuguese and Italian spreads to Germany were 3.5-4.0bp tighter

than the close on Tuesday.

- Potential tax changes have supposedly driven high levels of pension fund

investment into long bonds and equities. However, on Wednesday the US curve also

bear steepened aggressively, not helped by a very large 30Y Ultra block. 

- Italy successfully sold E3bln of debt although the size was relatively small

and was not really a market test.