Core and semi-core EGBs leapt higher....>

EGB SUMMARY: Core and semi-core EGBs leapt higher on Friday. There was heavy

volume at around 0800GMT at which point the Bund contract surged and the

peripheral markets sank hard. Most selling was in the BTP market although

contacts laid the blame at the door of dealers, rather than any real money flow.

- There has been a pattern of weaker debt in late US and Asian time zones but

positive price action in Europe.

- BTPs went through several waves of widening and tightening but were only 4bp

wider to Bunds heading into the close. Portugal was 6bp wider. 

- Italy sold CTZ and BTP linkers into only modest demand.

- There were no data surprises, just affirmation of preliminary estimates of

German GDP and Eurozone HICP.

- The 10Y-Bund-Treasury spread widened to it greatest spread since December

2016, assisted by a 5bp decline in the Bund yield to 0.657%. The curve flattened

aggressively over the course of the day to its flattest in almost a month. 

- Next week sees a large pick-up in supply, MNI estimates E30bln, somewhat

offset by a French redemption payment on Monday and month-end index extensions.