Anne Karina Asbjorn and Ionnis Sokos at........>

EGBS: Anne Karina Asbjorn and Ionnis Sokos at Nomura look at EGB supply in 2018

and conclude that talking into account redemptions and APP, net-net supply will

remain negative in 2018 and this limits the potential rise of yields in 2018.

- Nomura believe "an outright short position in the periphery is very punitive

in terms of carry and rolldown" and point out that the Bund-BTP spread has

"de-synched from risk".

- More specifically, ttheir analysis of where the various curve slopes in the

periphery sit relative to history leads them to recommend "a 5s10s BTPs

steepener as a defensive expression for potentially higher yields ahead and as a

hedge ahead of the Italian elections. The main risk for this trade is further

rally on 10yr BTP, which could bull flatten the 5s10s segment".

- One additional selling point for this trade is the 5s10s has a roll and carry

of 2.6bp. They targets a spread of 140bp over the coming 3 months.