Core fixed income has traded with a.....>

EGB SUMMARY: Core fixed income has traded with a risk-off pattern today with

Bunds moving higher in line with gilts, but outperforming Treasuries. Peripheral

spreads are a little wider on the day too. This is against a strange backdrop,

however. (Sep Bund futures (RX) up 61 ticks at 176.62, Italy / German 10-Yr

spread 7.5bps wider at 178.2bps). US equities are a bit lower, oil is pretty

much flat on the day while European equities are mixed to a little higher.

- The ECB Accounts stated that most ECB Governing Council measures agreed with

Chief Economist Lane's outlined expansion of the PEPP programme at the ECB

meeting earlier this month. There was also a general consensus that in stressed

financial conditions, asset purchases were more effective than lower rates.

- Exec Board member Schnabel followed up the Accounts and Lane's speech with

further comments that financial conditions now remain tighter than pre-Covid in

spite of the stimulus in place. ECB's Mersch also spoke today and stated that

PEPP's flexibility is an asset in crisis time, but pre-set monthly purchases in

line with the capital key and issuer/issue limits were key safe guards for the

ECB that will need to be adhered to when not in crisis mode.