EGBs are trading mixed with yield.......>

EGB SUMMARY: EGBs are trading mixed with yield curve steepening in majority of

countries in  the Eurozone as markets continue to digest the comments from ECB

Weidmann, hinting that rates are unlikely to rise any time soon, although some

of the gloss has been taken off. German 10-yr Bund yield is -0.7bp at 0.573%

- The long end of the periphery curves are suffering however, likely weighed by

expectation of further syndication deals from Spain and Belgium. Spain and Italy

30-yr yields are 2.4bp and 2bp higher respectively. While large redemptions from

Italy, the Netherlands and Austria are having little impact on markets so far

this morning. Both Spain and Italy 10-yr spread vs Germany are 1.3bp wider.

- With Eurozone data limited to November trade balance (modest pick up to

E22.5bln from E19bln) attention has been on more clarity of German grand

coalition progress and if it is likely to get approved this weekend and the

continued strength in the Euro as Dollar sells off. 

- With the next ECB monetary policy just over a week away, the rise in the Euro

against the US dollar might come to the attention of the GC who might want to

talk down the currency as recent rise could weigh on inflation.