EGB/GILT: Yields are higher across.....>

BOND SUMMARY: EGB/GILT: Yields are higher across the German curve and the gilt

curve as risk recovered somewhat, particularly towards the start of the European

session. Peripheral spreads are also considerably tighter on the day.

- Policy responses have been the main talking points in the market with talk of

TLTROs or variations of TLTROs garnering a number of questions today. Note that

we put our view on ECB policy on Bullets/Edge at 3:58ET. This was around 20

minutes before Reuters ran a sources story stating that a new TLTRO was under

consideration.

- Carney and a number of other MPC members testified ahead of the Treasury

Select Committee this morning. They were very non-committal on policy responses

but did note that the coronavirus had the potential to have a severe shock to

growth over the next couple of quarters. The MPC did not rule out acting before

the March meeting and reiterated Carney's January 9 line that there is around

200-250bp of policy space (through a combination of rate cuts, QE and forward

guidance).

- Bund futures are down -0.76 at 177.07 and Gilt futures down -0.28 at 135.45.