EGB/GILT: Core European govies trade...>

BOND SUMMARY: EGB/GILT: Core European govies trade a touch weaker while the

periphery has rallied this morning. The focus today is the ongoing EU summit

negotiations over the European recovery fund. Although there are some signs of

progress following an apparent agreement on the size of grants for

crisis-stricken countries, a proposed disbursement mechanism has revealed stark

divisions. Negotiations are set to resume at 1500BST.

- Gilts started on a much weaker footing but have clawed back some losses.

Yields are now close to unch on the day.

- Bunds are similarly a touch weaker with the curve close to flat. Current yield

levels: 2-year  -0.6669%, 5-year -0.6370%, 10-year -0.4356%, 30-year 0.0021%.

- OATs trade mixed with the short-end weaker and the long-end trading slightly

firmer.

- BTPs have rallied with cash yields 3-5bp lower on the day and the curve bull

flattening. 

- Supply this morning came from Germany (bubills, EUR3.95bn) and the Netherlands

(DTCs, EUR3.39bn).