Core EGBs have broken decisively........>

EGB SUMMARY: Core EGBs have broken decisively higher Friday, alongside periphery

spreads blowing out as Eurozone recession fears abound.

- Weak French and German flash PMIs this morning set the tone for the day,

adding fuel to the fire begun by the dovish Fed's actions Wednesday.

- Big rally at long end of the German curve: 2-Yr yield is down 1.3bps at

-0.562%, 5-Yr is down 4.1bps at -0.403%, 10-Yr is down 6.7bps at -0.026%, and

30-Yr is down 9.1bps at 0.589%.

- Meanwhile, BTPs have weakened as risk aversion has risen. The 10-Yr BTP spread

vs Bunds is up 8.3bps at 249.7bps, eclipsed only by the widening of Greek

spreads (up 10.1bps).

- Spain and Portugal 10s are around 4-5bps wider as well.

- French spreads began widening over the course of the afternoon, having

resisted earlier in the day. 10-Yr vs Bunds now 37.0bps, 0.8bps wider.

- Euribor futures strip bull flattening as well, with Green/Blue contracts up

3.0-4.5 bps and Whites anchored.

- Next week sees lots of ECB speak, including Draghi/Praet/Coeure.