Bunds have retreated from their highs...>

EGB SUMMARY: Bunds have retreated from their highs but remain up on the day,

with periphery spreads widening across the board, led by Greece. Risk looks off

across the board (equities are offered as well), with potential for global trade

risk headlines from the G7 summit this weekend.

- Greek debt is underperforming badly, with 10-year spreads over Bunds are

31.5bps wider at 440.9bps on news the ESM has postponed the disbursement of a

E1bln funding tranche to the country. 

- Italian spreads, up 4.8bps at 262.2bps, and Portugal's, up 4.5bps at 4.4bps,

are doing better than Greece but not as well as Spain, which has moved 2.3bps

further outside Germany at 101.2bps.

- In fact, yields on all EGB 10s are down with the exception of Greece. Bund

yields outperforming, with the 10-year down 5.3bps at 0.431%. With Schatz yields

down 3.1bps at -0.642%, the German curve is bull flattening in a departure from

the steepening trend of the past week.

- The Euribor strip is seeing some strong flattening action as well, with Blue

contracts up 5.0-5.5 ticks, and Sep and Dec8 down 2.5 ticks.