EGBs-GILTS: Core FI Higher As Bank Stocks Retreat

Bunds and Gilts are shooting higher, with periphery spreads widening, as equities head into the red to start the week.

The trigger has been the underperformance of bank stocks following an investigation published over the weekend on major banks allegedly moving illicit funds even after receiving warnings from gov't officials. (Financials -3.3% on Eurostoxx 50, vs -1.7% for the index).

Spain (alongside Portugal) actually outperforming the periphery despite S&P's revision of outlook to negative from stable after hours Friday (may have been anticipated, SPGBs underperformed Friday).

In supply, Slovakia sells EUR0.5bln and Belgium up to EUR2.0bln.

Largely 2nd tier data today. ECB's Lagarde speaks at 1345BST, while Holzmann participates in a workshop at 1500BST. ** Latest levels:

• Dec Bund futures (RX) up 28 ticks at 174.35 (L: 173.95 / H: 174.4)
• Dec Gilt futures (G) up 25 ticks at 136.84 (L: 136.4 / H: 136.9)
• Dec BTP futures (IK) up 3 ticks at 146.52 (L: 146.3 / H: 146.59)
• Dec OAT futures (OA) up 22 ticks at 168.46 (L: 168.08 / H: 168.49)
• Italy / German 10-Yr spread 2.1bps wider at 146.8bps