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

EGB SUMMARY: Core/Semi-core European Government Bonds are trading higher, mainly

led by the 10-yr sector as markets unwind some of the risk-on sentiment seen on

Monday. Higher than expected UK CPI knocked them off session highs, however,

have started to recover those losses.

- German 10-yr yield is 3bp lower at 0.727%, while the 2-yr and 30-yr sectors

are little changed and 0.5bp lower respectively.

- EMU periphery are under pressure though, weighed by the risk-on unwind and a

rather lack lustre 3-yr, 7-yr and 30-yr BTP auction. In fact it is the 30-yr

sector that is trading sharply lower with Italy 4.5bp higher and Spain 5.2bp

higher. Bund/BTP 10-yr spread is 5.2bp wider at 133.2bps.

- Belgium so far has not come to the market with a new 15-20-yr syndicated Green

bond as was expected but markets remain wary with 30-yr semi-core EGBs

underperforming the core.

- There has been some decent swap flows seen today, mainly in the 10-yr and

above area which appeared to be flatteners with paying in 10s and receiving in

30s.