Core and Semi-core EGBs are getting off to a...>

EGBS: Core and Semi-core EGBs are getting off to a positive start Friday,

supported by mild flight-to-quality bid as Italy concerns continue to weigh on

the Market. While sharp turn around in US Treasuries in last hour of Asian

trading also seen supporting bid. German 10-yr Bund yield is 0.7bp lower at

0.632% with curve marginally flatter as 2-yr remains anchored.

- Italian BTPs have come under renewed pressure once again as latest headlines

talk of the new coalition government planning to raise short-term debt to pay

what it owes to firms. Sources reported decent selling in the long-end of the

BTP curve this morning with circa E320mln sold on screen. 10-yr Bund/BTP spread

is 3.7bp higher at 151.2bps after hitting high of 153.5bps.

- There is very little in the way of Eurozone data released Friday to get

excited about, so attention likely to remain in Italy. Early on saw German

wholesale prices tick higher to 1.4% y/y in April from 1.2% y/y in March.

- Euribors are mixed so far Friday, with strip marginally flatter as 3 out of

the 4 Blue contracts rise by half a tick.