Core/Semi-core EGBs have opened higher.........>

EGBS: Core/Semi-core EGBs have opened higher supported by flight-to-quality bid

as Italy concerns rise up a notch following newswire reports that the IMF has

delayed its economic review and that the budget meeting is due to start today.

German 10-yr yield is 2.6bp lower at 0.434% with yield curve modestly flatter.

- The news on Italy has sent the short-end of the BTP yield curve sharply higher

this morning with 2-yr and 5-yr yield rising 28bp and 25bp respectively with

summer thin markets not helping either. The large move in BTPs is also dragging

the rest of the periphery with it as well. 10-yr Bund/BTP spread is 11.2bp wider

at 256.5bps

- One source earlier said that they had not seen a domestic seller of BTPs so

far, maybe waiting it out and hoping it will settle down in the days ahead

- Final Eurozone service PMI data is the main highlight this morning before

attention turns to key US nonfarm payroll data. So far Spain's service PMI

dropped more than expected, with Italy's eyed next.

- The front end of the Euribor strip has come under large selling pressure so

far this morning with Sep8, Dec8 & Mar9 1, 1.5 & 0.5 ticks lower.