EGBs began the morning on the back......>

EGB SUMMARY: EGBs began the morning on the back foot but weak eurozone inflation

data pushed them broadly higher mid-morning.

- Bunds are slightly off their highs but stronger on the day, with Jun8 futures

now up 32 ticks to 158.91 (low was 158.43, high was 158.96). German 2s-10s curve

flatter by 1.5bps to 113.6bps as long end outperforms.

- While news of Italian President Mattarella calling for a new round of

consultations over government formation on May 7 would seem to be bullish for

BTPs, the 10Y spread over Bunds continues to widen from the day's low of

119.1bps set post-EMU inflation data, and at 121.3bps is up about 0.3bps today.

- BTP underperformance is in some contrast to Bonos/Bunds which is a little

tighter overall (10s spread is down 1bps overall to 72.0bps though up from the

day's low of 69.7).

- Euribor curve flattening move is maintaining its momentum, with blues rallying

sharply and whites and reds largely flat. ERZ1 last up 4.5 ticks to 99.195.

- ECB's Praet, Constancio and Coeure are speaking today, with SNB's Jordan also

due up.