Bund yields were contained in a.........>

EGB SUMMARY: Bund yields were contained in a fairly narrow range around 0.336%;

core markets generally took a back seat to an incredible run from the periphery.

- The BTP market was strong straight out of the gate and we heard of domestic

buyers in the 7Y+ sector of the curve. 

- The Bund-BTP spread collapsed to the lowest since Oct 2016 and the tightening

was added to via stop-loss momentum. Then at the European lunchtime, strong

Intesa San-Paolo results prompted another sudden round of Bund-BTP spread

tightening. 

- There was also an impressive performance by European linkers coming in the

shadow of a very strong Bundei 2030 auction and Aug-2048 Gilt linker

syndication. OATei breakevens rose 2-3bp across the curve, with real yields

dropping by more although failing to keep pace with 4-7bp declines in Gilt real

yields.

- Elsewhere in EGB space other peripheral markets performed well. Ahead of the

auction tomorrow, 10Y Portugal breached the 2% barrier for the first time since

2015 and Spain almost kept pace with Italian debt.