EGBs/GILTs: Markets are still..........>

BOND SUMMARY: EGBs/GILTs: Markets are still deciphering yesterday's ECB easing

package. While the run rate of QE (E20bln/month) was less than expected, the

open-ended nature of the programme coupled with the enhanced forward guidance

signalled a strong commitment to reviving inflation.

- Fresh warnings from ECB President Draghi on the need for fiscal stimulus,

coupled with persistent economic weakness in the euro area (particularly

Germany) is likely to fuel the debate on the need for higher public spending.

- Bunds trade softer from the open with the very long-end underperforming. The

30-year benchmark yield is up 5bp.

- The French OAT curve has similarly bear steepened with the 2s30s spread

trading up 4bp.

- The DUP's Arlene Foster has warned that the UK must leave the EU as one nation

and that her party will not support a deal that would create a barrier between

East-West trade.

- Gilt yields are 2-3bp higher. Current yield levels: 2-year 0.555%, 5-year

0.522%, 10-year 0.701%, 30-year 1.154%.