A renewed risk-off environment with.....>

EGB SUMMARY: A renewed risk-off environment with equities under pressure has

core EGBs trading stronger and periphery EGBs weaker.

- Dec 18 Bund future is up 28 ticks at 159.62, early high of 159.73 today.

German curve is bull flattening slightly, 2-Yr yield down 1.3bps at -0.602%,

5-Yr down 1.5bps at -0.154%, 10-Yr down 2bps at 0.428%.

- OATs likewise a little higher, Dec18 future up 21 ticks at 151.23.

- With equities hitting fresh multi-month/year lows (EuroStoxx50 has fallen to

new low since Dec 2016), following on from Asian trading, periphery EGB spreads

are widening: Italy 10Yr/Bunds out 2.8bps at 307bps, Spain up 1.2bps at 126bps,

Portugal out 1bps at 157.5bps, Greece out 4.3bps at 392.8bps.

- Italian BTP futures have recovered losses at the open but remain slightly

weaker, Dec18 down 2 ticks at 120.81, low of 120.15. Latest headline from La

Stampa via RTRS is that Rome hopes ECB would buy Italian bonds if need be.

- Thin data/speaker calendar in EMU today. EU Commission likely to decide

Tuesday on a request/demand for Italy to resubmit its budget.