A risk-off day for equities helped......>

EGB SUMMARY: A risk-off day for equities helped sink Italian BTPs while boosting

core EGBs.

- With the DAX off 2.4% and Euro Stoxx off 1.8% amid a global equity rout, Bunds

picked up steam, and are currently around day`s highs.

- The Dec 18 Bund future is up 60 ticks at 159.94, having traded in a range of

159.43-159.98 today. The 10-Yr is outperforming on the cash curve, yield down

4.3bps at 0.405%, while 2-Yr yield is down 1.7bps at -0.606%, 5-Yr is down

3.3bps at -0.172%, and 30-Yr is down 3.9bps at 1.026%.

- While general risk aversion could be blamed for periphery EGB spread widening,

actually Italy has been a major underperformer today following (largely

expected) news that the European Commission has rejected its budget proposal.

- 10-Yr BTPs v Bund spread is up 11.3bps at 315.5bps, while Spain is out 1.2bps

at 126bps, Portugal out 3.2bps at 159.7bps, Greece out 2.5bps at 390.9bps.

- Euribor futures a little stronger at the end of the strip, Blue contracts up

3.5-4.0 ticks.

- Wednesday`s data includes EMU/DE/FR Oct flash PMI.