EGBs are trading higher across the......>

EGB SUMMARY: EGBs are trading higher across the board with yield curves flatter

as long-end outperforms supported by soft UK core inflation data and overall net

supply being favourable this week. German 10-yr yield is 2.5bp lower at 0.562%

- EGBs opened modestly higher largely dismissing hawkish comments from ECB

Hansson yesterday. Markets were also unperturbed by the launch of Belgium's new

10-year Euro benchmark syndicated bond as Gilt markets opened higher supported

by BoE Tenreyro comments that the central bank was in no rush to hike rates.

- EGBs expended their gains as UK core inflation came in softer than expected

and Belgium 10-yr syndicated deal showed strong demand. A Reuters headline that

ECB is unlikely to drop pledge to carry on QE until CPI towards target quoting

"sources" also underpinned bid in EGBs.

- There has been decent interest reported in BTPs today, with sources reporting

cash buying in the long-end and buying from alm/treasury in 5Y to 7Y sector

which has supported the rest of the periphery. 10-yr Bund/BTP spread is 3bp

tighter at 138.5bps.