EGB markets started Monday at...........>

EGB SUMMARY: EGB markets started Monday at approximately the same level as they

departed on Friday. However, the yen suddenly appreciated strongly just before

the open of European equity markets and the Bund followed. The move has shaved

1bp from the 10Y Bund yield to 0.35%. 

- Following the initial movement in the Bund, the 2Y Schatz also saw a spike in

volumes and 11k DUZ7 contracts were suddenly traded in one minute at 0811GMT,

which did not look like a contract roll.

- Core-periphery spreads are tighter today led by 1.5bp contractions in Bund-BTP

and Bund-Bonos 10Y spreads. Irish debt is showing no reaction to a potential

collapse of government as weekend talks failed to solve problems.

- This week is almost devoid of EGB issuance. On Friday, Italy announced that

Wednesday's M/L auction would only include small amounts of CCTs and the 10Y

BTP, the 5Y BTP was cancelled.

- Today, Italy sells only a 2Y CTZ, which looks extremely cheap to the BTP

curve. Supply pressures are minimal. In the background, Greece is undertaking a

massive debt exchange that should be concluded tomorrow.