Core EGBs have surrendered most gains...>

EGB SUMMARY: Core EGBs have surrendered most gains reached after a Bank of Japan

decision that was more dovish than feared, while periphery spreads are tighter.

- Bunds have traded in a wide range, with significant bull flattening mirroring

the JGB curve move early, but selling off as EMU inflation came in above

expectations. 10-Yr yields fell to 0.4096% around the cash open, but now trading

flat on the day at 0.445%. 2s10s 1bps lower at 101.7bps.

- Italian BTP spreads have come in following GDP data released 1100BST showing

Italy growing slowest in two years but in line with estimates at 0.2% Q/Q. 10-Yr

BTPs are 2.1bps tighter to Bunds at 232.0bps, with yields down 2bps at 2.765%.

- Portuguese PGB spreads are also tightening, 10-Yr 2.4bps tighter to Bunds.

- A bit of flattening in the Euribor futures strip, with contracts out to Mar-21

off 0.5-1.0 ticks, and 2022 contracts up 0.5-1.0 ticks.

- With EU data out of the way for Tuesday, attention turns to US data including

PCE inflation and MNI Chicago PMI this afternoon. On Wednesday, EMU

manufacturing PMI, Fed decision and Bund auction in the offing.