EGB moves this afternoon appeared to....>

EGB SUMMARY: EGB moves this afternoon appeared to be driven by news of Italy's

5-Star leader Di Maio seeking new elections as soon as June, with coalition

talks at an impasse. 10yr BTPs accelerated losses that began mid-morning, with

the yield up 6.7bps at one point to 1.821% before stabilising just below 1.80%.

- The Italy news also spurred a safe haven bid, with the Jun18 German Bund

future up by around 19 ticks at one point to an intraday high of 158.75. It then

partially reversed those gains at 1400CET as German Apr CPI came in line with

the MNI median forecast though were a touch higher than Bloomberg consensus. The

belly of the curve outperformed while German 2s10s steepened by 0.2bps to

114.68bps.

- Overall, 10-year BTP/Bund spreads have widened 5.9bps today to 122.81(up

around 13bps from a 2-year low set last week), with Italy underperforming Spain

and Portugal by around 2.7bps.

- Tuesday is shaping up as a relatively quiet one, with the May Day holiday, and

markets looking ahead to EMU GDP (Wed) and inflation data (Thu), alongside a

heavy US data calendar and FOMC decision.