EGBS are trading mixed with Italy.......>

EGB SUMMARY: EGBS are trading mixed with Italy being the start performer so far

Wednesday, likely supported by news that a mediator has been appointed to break

the deadlock of forming a new government. While surprise downside revision to

Eurozone inflation did not give EGBs the expected support. German 10-yr Bund

yield is 0.5bp higher at 0.512%.

- 10-yr Bund/BTP spread is 3bp tighter at 122.2bps as newswires report that

Italy president Sergio Mattarella has asked Senate speaker Elisabetta Casellati

to act as mediator to try and break the deadlock of forming a new government

between the centre right alliance and the 5SM and to report back by Friday.

- Final Eurozone March inflation was revised lower by 0.1% to 1.3% y/y while the

February print was revised down to 1.1% y/y from 1.4% y/y. Core HICP though

remained unchanged at 1.0% y/y, which actually weighed on EGB market.

- Bunds initially followed Gilts higher in wake of weak UK CPI data, however

reversed gains in run-up to 10-yr Bund re-opening auction and EMU HICP data.

- Bund auction came in fully covered, only the third time in the last 7 auctions

and came with a 0.2bp premium.