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Core EGBs are a little weaker and.......>

EGB SUMMARY
EGB SUMMARY: Core EGBs are a little weaker and Italian yields have fallen
sharply early on Friday, with EMU CPI data and Italy`s ratings review by Fitch
up later.
- EMU data mixed so far this morning with French July CPI in a little above
expectations (by 0.1 perc. pt M/M on both CPI and HICP) but German retails sales
for July disappointing.
- The reaction has been likewise mixed. German curve is a little flatter, with
2-Yr Bund yields up 0.5bps at -0.595% and 10-Yrs up 0.1bps at 0.3472.
- French OATs are a little stronger after opening weaker, with 2-Yr yields down
0.1bps at -0.435% and 10-Yrs down 0.2bps at 0.691%.
- Italy's BBB (stable outlook) credit rating at Fitch is set to be reviewed on
Friday with the fiscal uncertainty surrounding the new government leading to
speculation of a downgrade/move to a negative outlook. 10-Yr BTP/Bund Spread
2.8bps narrower after nearing multi-month highs Thursday.
- The Euribor futures strip is completely flat.
- EMU unemployment and flash CPI up at 1000BST.

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