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Core/Semi-core European government......>

EGB SUMMARY
EGB SUMMARY: Core/Semi-core European government bonds are trading lower, curves
steeper, but have bounced off sessions lows as majority of supply for the week
is now behind us. German 10-yr yield is 2bp higher at 0.582% vs intraday high of
0.595%. While 2s30s spread is 2.6bp steeper.
- Bund future opened sharply lower seen weighed by risk-on sentiment and then
extended losses on stop loss selling, chatter of convexity hedging and weight of
EGB supply from Spain, France and Austria.
- Spain sold a combined total of E4.093bln in 5-yr, 15-yr and 30-yr Bonos,
France got away E7.497bln 3-yr, 5-yr and 6-yr OATs, while Austria's book for new
10-yr Euro syndicated deal is in excess of E15.2bln.
- Risk-on sentiment and solid Spanish Bono auction has led EMU periphery to
outperform Bunds with 10-yr Bund/Bonos 3.4bp tighter and Italy and Portugal not
far behind at 3bp tighter.
- Early speech by ECB Weidmann concentrated on why Germany should resist
expanding fiscal policy, however Coeure comments this afternoon will be closely
watched for any views on Euro appreciation or timing of rate hikes.

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