Despite mediocre auctions of BTPs on....>

EGB SUMMARY: Despite mediocre auctions of BTPs on Wednesday and a technically

uncovered auction of the 0.50% Feb-28 German bund, EGBs have broadly fared well.

With the news flow dominated by the US-North Korea summit, European political

developments have moved down the agenda.

- The benchmark 10-year BTP yield has drifted lower through the session and

currently trades at 2.76%, with the spread over the 10-year bund narrowing to

227bps from 235bps at the open. The curve has slightly bull steepened as a

result of the short-end outperforming. 

- German bunds sold-off following the poor auction result, with the 10-year

yield trading at 0.488%, up from the low of 0.464% and near the top end of the

day's range. The bund curve has flattened slightly through the day.

- EURIBOR futures are up around 1-2 ticks across the strip. 

- There is significant event risk coming up, with the ECB Governing Council due

to meet on Thursday. Speculation is building that ECB President Mario Draghi may

implicitly or explicitly announce an end to QE in the near future. Before then,

the market is eyeing the FOMC decision later today.