EGBs are strengthening as the week......>

EGB SUMMARY: EGBs are strengthening as the week begins drawing to a close, with

Bunds tearing higher and rate futures ticking up.

- Bund futures have taken a breather since 1030BST after rallying 42 ticks to a

high of 163.19. No specific catalyst for the surge apart from Brexit concerns

with US President Trump critical of UK PM May`s Brexit plans and dampening hopes

for a prospective UK-US trade deal.

- Periphery EGBs area rallying as well, but the move higher in Bunds has

resulted in spreads widening slightly. Italian short-end BTPs are weaker, partly

reversing Thursday`s rally, but 10-year yields are 2.8bps lower at 2.595%.

- 10-year BTPs are 0.1bps tighter to Bunds at 226.7bps, but Spain, Portugal and

Greece wider by 0.3bps, 1.2bps and 1.6bps respectively despite lower yields.

- Curves are generally flatter; German 2s10s 2.3bps lower at 96.6bps, Italian

equivalent down 2.4bps at 189.4bps. Euribor futures rallying at the long end as

well, with Green and Blue contracts up 1.5-2.0 ticks.

- Fed semi-annual report to Congress the main event today, with some EMU rating

reviews due after the close (DBRS on Italy, Fitch on Spain).