EGB markets are showing little.........>

BOND SUMMARY: EGB markets are showing little concern over what was once

considered a dangerous political outcome in Italy in the form of a 5-Star/Lega

government, with periphery spreads remaining well-behaved and Core rates off.

- Later today we get more colour on what the next Italian government might look

like, with 5-Star and Lega meeting with Pres Mattarella. 10Y BTP/Bund spread up

only 0.1bps to 131.32, but well off last week's high above 138.

- Bunds are sharply weaker, the Jun18 future last 49 ticks off at 158.36.

Long-dated Euribor futures are weakening, with Dec21s down 4 ticks to 99.12

(technical support next at 99.10), steepening the strip with whites barely off. 

- While the attention has been on Italy, Portuguese 10-year PGB/Bund spreads

have fallen to a six-session low at 111.39bps. Portugal now 20.1bps inside

Italy, taking aim at the 22.7bps level set in March.

- In a light data day, focus is on ECB speakers coming up, incl Praet,

Lautenschlaeger & Coeure. ECB`s Villeroy sounded modestly hawkish this morning.

- Little action in JGBs or USTs though both are weaker. Jun18 JGB futures off 3

ticks at 150.77; Jun18 US T-Notes likewise off 3 ticks at 119.09.