EGBs are trading mixed with core........>

EGB SUMMARY: EGBs are trading mixed with core marginally higher but with the EMU

periphery marginally lower as markets continue to digest the comments from ECB

Weidmann, hinting tat rates are unlikely to rise any time soon. Large

redemptions from Italy, the Netherlands and Austria also underpinning EGBs

- The chances of a German Grand Coalition are far from clear as some senior SPD

members voice concerns of going into power with Merkel's conservative party.

Although it is expected to get backing by the party on Sunday.

- The Euro has extended gains against the US Dollar, and this is likely to be

picked up by the ECB ahead of its GC meeting next week as the rise could weigh

on inflation going forward.

- With little Eurozone data today, attention at the start of the week is on EGB

supply and large redemption and coupon payments scheduled this week. Markets

will also be keeping an eye out for any syndication announcements with Spain,

Belgium and Finland all still expected to announce deals before end of Jan

- German 10-yr yield is 0.4bp lower at 0.576% while Spain and Italy 10-yr spread

to Bunds are around 1bp wider.