A calmer day for EGBs following a few...>

EGB SUMMARY: A calmer day for EGBs following a few days of Italy volatility,

with levels relatively steady on the day despite some large moves on the open.

- Relatively little market reaction to the US tariff announcement vs the EU and

others, or the EU moving to retaliate in kind, but Bunds did hit a bid after

news that Deutsche Bank was under FDIC investigation in the US and the share

price fell. Jun18 Bund future remains around day`s highs, up 9 ticks to 162.10.

- After falling initially this morning by 29bps, Italian 10Y BTP spreads over

Bunds (now 251.8bps) gave up most of their gains as markets await news on

whether M5S can indeed pull a government together by the end of the week.

- Spanish political intrigue seemed to steal the spotlight from Italy

mid-afternoon as it emerged the Basque party would join a no-confidence vote

against PM Rajoy. Spanish 10Y spreads over Bunds widened by 2.0bps to 117.9bps,

and are now trading 135.3bps inside BTPs, that advantage slipping 2.6bps today.

- Some steepening in bond curves, and also in in the Euribor futures strip as

short-dated contracts rallied 1-2 ticks and Greens and Blues dropped 1.5-2.