After a quiet start to the week, risk...>

EGB SUMMARY: After a quiet start to the week, risk appetite deteriorated around

mid-to-late morning European time with European equities now lower on the day,

Bund futures higher and peripheral spreads wider (with the exception of BTP

spreads which are tighter on the day).

- The main trigger for the sell-off seems to have been an increase in the R

value in Germany - although this seems to be largely due to an outbreak in one

factory rather than anything more widespread. There are also concerns about the

spread of Covid-19 in Melbourne, Australia, and several US states.

- Talk of a VAT cut in Italy has continued over the weekend and seems to have

accelerated further today. ** Latest levels:

* Sep Bund futures (RX) up 45 ticks  at 176.13 (L: 175.6 / H: 176.37)

* Germany: The 2-Yr yield is down 2.2bps at -0.691%, 5-Yr is down 3.3bps at

-0.685%, 10-Yr is down 2.9bps at -0.444%, and 30-Yr is down 1.7bps at 0.002%.

* Sep BTP futures (IK) up 86 ticks  at 143.52 (L: 142.47 / H: 143.56)

* Sep OAT futures (OA) up 49 ticks  at 167.51 (L: 166.9 / H: 167.65)

* Italy / German 10-Yr spread 4.5bps tighter at 172.7bps