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Complacency over Italian politics......>

BOND SUMMARY
BOND SUMMARY: Complacency over Italian politics was shattered this morning as
BTP/Bund spreads touched fresh 7-week highs above 142bps, up over 11bps and
breaking the 12-month downtrend on concerns over 5-Star/Lega's policy platform. 
- Core EGBs had some relief after yesterday`s US Tsy-led sell-off. Apr inflation
figures this morning for Germany and EMU were in line, though Bunds appeared to
pick up a bid around the release, helped in part by Italy-led risk aversion.
Jun18 future last up 41 ticks at 158.18. Re-opening of 10Y benchmark 0.50%
Feb-28 today bears watching, with bidding closing at 0930GMT.
- US 10Y Tsys have recovered slightly but remain well above the key 3.00% mark,
last at 3.06%. Today`s highlights include US industrial production (1315GMT),
with Fed speakers including Atlanta`s Bostic and St Louis` Bullard.
- Gilts are going along for the ride, with Jun18 futures up 20 ticks to 121.63.
A modest uptick (1 tick) across Short Sterling strip.
- JGB futures have traded back up to session highs with the 10-year at 150.75
after recovering strongly from the daily low of 150.62.

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