EGBs are slightly off the morning.......>

EGB SUMMARY: EGBs are slightly off the morning lows but still down on the day as

markets digest the combination of US10Y-Tsys touching 3.0% and US withdrawal

from the Iran deal underpinning inflation expectations via higher oil prices.

Weak French IP/manuf data this morning appeared to have little impact.

- Germany had a lacklustre, uncovered reopen of the Aug-48 this morning, with

the cover ratio at 0.71, below previous 30-year auction in Mar (0.85). Still,

little reaction overall as yield flat compared to pre-auction at around 1.26%.

- Conversely, Portugal had a solid PGB tap of both Oct-23s and Oct-28s, with

cover ratios well over 2.0. 10-Yr PGB/Bunds spread down 4.5bps today to

112.8bps, outperforming Italy (spread down 3.2bps) and Spain (4.0bps). 

- German curve slightly steeper, 2s-10s Bunds up 2bps by midmorning to a high of

115.42bps. But a little flattening action since then, to 114.5bps. Market

sources seeing cash buying Bunds in low 158.60s, vs selling Schatz 111.895/90.