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EGBs are weaker for the most part.......>

EGB SUMMARY
EGB SUMMARY: EGBs are weaker for the most part despite what appears on the
surface to be a risk-off backdrop, with heavy supply weighing.
- Busiest morning for issuance in recent memory, with two syndications (books
closed): EFSF E3bln dual tranche books >E8.5bln combined and Italy 50-Yr BTP tap
at E3bln with books >E17bln.
- Not to mention German and Dutch auctions and Spain/Belgium bills.
- This appears to be weighing most on EGBs across the space. Indeed, Bund
weakness comes despite weak equities (DAX off 1%) amid BASF profit warning.
- German curve pretty flat (yields +0.3bps to +0.7bps).
- Decent periphery EGB spread compression alongside, with Italy/Spain/Portugal
in 2-6bps vs Bunds. However, Greece 10s are +9bps wider of Bunds, reversing
post-election gains. Eurogroup warning Athens on sticking to budget commitments.
- Sep OAT futures (OA) down 24 ticks at 165.64 (L: 165.46 / H: 165.86).
- A few impactless ECB speaker headlines from Coeure (Reuters running interview
that came out Monday) and Villeroy (EU banking consolidation).
- Euribor strip bear steepening, with Whites +0.5/1.0, Blues +3.0/3.5 ticks.

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