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/EGBs-GILTS: BTP spreads continue to...>

BOND SUMMARY
BOND SUMMARY: /EGBs-GILTS: BTP spreads continue to compress as Italian political
risks are seen waning, while issuance takes centre stage later this morning.
- Italy 10-Yr spread down 9.3bps vs Bunds, through 190bps for first time since
Jul 26 on optimism on 5-Star/PD forming a new gov`t. Pres Mattarella extended
talks through Weds; stumbling blocks are 2020 Budget and Conte as P.M.
- U.K. P.M. Johnson sending `sherpa` David Frost to Brussels Wednesday to
discuss a Brexit agreement. Meanwhile, Labour`s Brexit spokesman Starmer said
Parliament has one week to figure out how to prevent No deal Brexit, and said
his party would campaign for `remain` in a new referendum.
- The latter comments in particular seemed to weigh on Gilts early; Sep futures
up 16 ticks at 134.37 (L: 134.34 / H: 134.52) coming back from long weekend.
- Germany final Q2 GDP and French sentiment data both in line w exp. Not much
move in Bunds, Sep futures (RX) up 8 ticks at 178.6 (L: 178.45 / H: 178.71).
- Short Stg steady in Whites, +2.5-3 ticks further down. Euribor steady.
- 2-Year issuance today: Italy taps Jun-21 CTZ for up to E2.0bln;. Germany sells
new Sep-21 Schatz for E5bln. Both countries sell 10-Yr later this week.

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