Core EGBs are coming off following a....>

EGB SUMMARY: Core EGBs are coming off following a solid start. Early flattening

has reversed as the long-end has sold off, with Jun18 Bund futures dropping 12

ticks shortly after 1100BST to 158.94. Bunds 2s10s 0.5bps up at 113.7bps.

- This has done little to dissuade a return of risk appetite in the periphery,

with Italy, Spain, and Portugal 10s tighter to Bunds. Italy the outperformer

with the 10-year spread dropping 3.5bps to 134.3bps (vs 139bps high Thursday)

with a solid BTPs auction this morning underpinning the earlier risk-on tone. 

- 5-Star and League apparently set to name a candidate for Prime Minister on

Sunday, paving the way to a coalition next week. Former head of Italy Secret

Service Giampiero Massolo is reportedly the frontrunner for PM.

- Some buying at the front end of the Euribor strip, with some slight steepening

overall as whites are half a tick higher and blues are down 1-1.5 ticks. 

- Not much in the calendar for this afternoon, with the highlight being ECB`s

Draghi speaking at the State of the Union event in Florence at 1415BST. No info

on subject matter, though SocGen speculates Draghi is likely to reiterate the

need for the ECB to remain "patient, prudent and persistent".