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EGB/Gilt: Italian politics has been....>

BOND SUMMARY
BOND SUMMARY: EGB/Gilt: Italian politics has been the big talking point of
European markets this morning with leader of the 5-Star movement, Luigi di Maio,
said to have announced in an internal meeting today that he would stand down as
leader of the party but would remain a member of the cabinet. He is said to be
making a public statement at 16:00GMT today to confirm his plans.
- BTP spreads had initially spiked almost 8bp wider on the open as the news
began to break and concerns about the future of the coalition picked up,
particularly ahead of the upcoming regional elections this weekend. However, we
judge that there should be little impact on the regional elections and, indeed,
BTPs have pared their losses with spreads now 1.6bp wider on the day.
- Bunds have been on the front foot today, outperforming USTs and gilts amid
talk that there was a large block trade buy.
- Gilts have been underperforming following the better than expected CMI survey.
We note however, that the survey simply points to improvements rather than the
magnitude of confidence improvements.
- Bund futures are up 0.07 at 172.28 with Gilt futures down -0.18 at 133.38.

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