Core and periphery EGBs have diverged...>

EGB SUMMARY: Core and periphery EGBs have diverged this morning. CPI data has

trickled out, with the Spanish Italian and state-level German prints suggesting

that the risks to the Eurozone flash estimate for June (released tomorrow) are

tilted to the downside.

- The benchmark 2-year bund yield has traded down to -0.687% from a high of

-0.674%, while the 10-year yield has edged down to 0.310% from 0.328%.   

- Similarly, the 2-year French OAT yield is down to -0.476% from -0.463% at the

open, with the 10-year trading at 0.699% from 0.711% at the open. 

- Meanwhile, Italian 10-year BTP yields have pushed up to 0.905% from a session

low of 0.828%, while the curve has flattened slightly since the early morning.

The 2s10s spread has narrowed to 190bps from a intraday high of 195bps.

- The EURIBOR futures strip has flattened slightly, with Reds through Blues up

0.5-1.0 ticks.