Core EGBs are weaker to open Tuesday....>

EGB SUMMARY: Core EGBs are weaker to open Tuesday as equities are a little

higher, with Italian BTPs rallying following the overnight budget release.

- The Dec 18 Bund future is down 20 ticks at 158.39, with some bear flattening

in the cash curve: 2-Yr yield up 1.5bps at -0.551%, 5-Yr up 1.6bps at -0.081%,

10-Yr up 1.1bps at 0.514%, and 30-Yr up 0.7bps at 1.137%.

- Tentatively positive open for the DAX (up 0.38%) after the preceding rout seen

contributing. ZEW out later, current expectations was previously -10.6 and is

expected to worsen to -15.0. Schatz supply this morning too.

- Meanwhile BTPs are flying out of the gate, Dec18 BTP future up 79 ticks at

120.79, high of 120.87. 2-Yr yield is down 14.7bps at 1.311%. 

- The Italian government revealed a budget agreement last night, with few

surprises - growth outlook appears optimistic and deficit trajectory unpalatable

to Brussels, but Fin Min Tria appears to have assuaged markets for now.

- BTPs leading periphery EGBs tighter to Bunds, 10-Yr spread down 7.9bps, Spain

and Portugal in 1.9bps, Greece in 0.8bps.

- Euribor down slightly, 0.5 ticks in Reds through Blues.