Core EGB yields remain directionless....>

EGB SUMMARY: Core EGB yields remain directionless while Italian BTPs have

recovered from earlier losses, as the EGB market continues to be buffeted by

Brexit headlines and speculation over ECB communication Thursday.

- The German curve is slightly flatter, with 2-Yr yields down 0.8bps at -0.545%,

10-Yr down 1.0bps at 0.421%, and 30-Yr down 1.0bps at 1.097% (seemingly

shrugging off Aug-48 auction this morning).

- Bloomberg cited 'officials' saying ECB will slightly lower its economic growth

projections, with the committee compiling the forecasts now seeing the risks as

tilted to the downside, at odds with the GC's previously 'balanced' view.

- Still, Euribor futures only modestly changed despite initial rally,

Jun19-Dec20 up 0.5 ticks, and contracts beyond that up 0.5-1.0 ticks.

- Italian BTPs have staged a massive intraday reversal, led by 2-Yrs which hit a

high of 0.843% mid-morning but since back down to 0.706%, down 7.6bps on the

day. BTPs possibly helped by agency DBRS's noting Italy's recent comments to

respect EU rules are 'a positive development', as well as that ECB news.

- Little in the way of data flow/speakers today.