EGBs are trading modestly higher but are off...>

EGBS: EGBs are trading modestly higher but are off opening highs as markets

digest the BoJ decision to introduce forward guidance and then comments from BoJ

Governor Kuroda. German 10-yr Bund yield last 2.2bp lower at 0.424% up from

intra-day low of 0.41%, with curves flatter as 2s30s tighten by 2bps.

- Markets also digesting the surprisingly strong French flash July inflation

numbers with HICP coming in at 2.6% y/y up from 2.3% y/y in June. This puts a

higher risk that overall Eurozone inflation will come in above consensus of 2.0%

y/y when it crosses the wires at 0900GMT.

- Back to the BoJ introduced forward guidance, noting that it intends to keep

very low rates for an extended period of time, while it maintained its 10-Year

JGB yield target at about 0.00%, albeit highlighting greater flexibility in bond

operations moving forwards.

- EMU periphery are also moving slightly higher, but are lagging core EGBs,

therefore leading to 10-yr spreads widening marginally.

- Along with Eurozone flash July CPI numbers, Germany releases unemployment data

and the Eurozone release advanced Q2 GDP as well.