As expected Spain's parliament..........>

EGB SUMMARY: As expected Spain's parliament blocked the government budget

proposal today, bringing the chance of early elections very much into the

picture. 

- Short end Spanish bonds sold off in the afternoon with the longer end making

small gains. 2yr yield is currently at -0.67%, 5yr at 0.215%, 10yr at 1.233%. 

- The continued recovery in Italian banks has added support to BTPs, the Mar-19

BTP future up 50 ticks on the day 127.62. 

- BTP yields have fallen across the curve with the 5yr outperforming, down

7.8pbs at 1.782%. 2yr yield is at 0.472%, 10yr at 2.793%. 

- Bunds have lacked direction throughout the day, the Mar-19 Bund future is

currently up 9 ticks at 166.11, having traded in a range of 165.86-166.24. 

- Periphery spread Vs Bunds has narrowed, helped by improved risk on sentiment

this week. 10yr BTP spread vs Bunds is at 266.6bps, PGB 10yr spread vs Bunds at

146.8bps.

- Tomorrow is data heavy with the Q4 GDP flash and Q4 unemployment data across

Eurozone countries.