A heavy lump of supply duration and a...>

EGB SUMMARY: A heavy lump of supply duration and a recovery of risky assets are

weighing on EGB prices today. The 10Y Bund yield is 1.3bp higher at 0.389%,

having shown some recovery as the French linker auction passed and marked an end

to the assault.

- The auctions generally went well despite the choice by the Spanish Treasury to

allocate heavily to the 50Y security, which meant that ~40k Bund

contract-equivalent of Spanish debt was sold today and the biggest

non-syndication Spanish supply day of the year.

- Spanish debt is performing well today as the IBEX equity index leads the

European bourses higher with a 1.3% gain. The Bonos-BTP has moved away from one

year lows. However, it is Portuguese debt that is strongest with a 4bp

compression in the Bund-PGB 10Y spread.

- Italy held back a little on the amount of BTP Italia securities that they

sold, allocating only around 30% of the E11bln institutional order book that

showed up today. With the retail orders, the total issue size is E7.1bln. 

- This week is now the largest EGB supply week of 2017 using nominal amounts.