EGBs/GILTs: The ECB's bazooka QE.......>

BOND SUMMARY: EGBs/GILTs: The ECB's bazooka QE announcement yesterday evening

has been the dominant theme underpinning the morning rally in European govvies.

- The ECB has created a Pandemic Emergency Purchase Programme that will allow

the central bank to buy E750bn of government and corporate bonds. The ECB also

hinted that it will consider the current self-imposed purchase limits.

- Italian BTPs, which had started to become dislocated, were the main

beneficiaries this morning. At one point, longer end yields had collapsed more

than 110bp. At the time of writing yields are 40-90bp lower across the curve

with the short end outperforming.

- Price action in bunds has been more contained and mixed. The shorter end has

trade slightly weaker. Current yield levels: 2y -0.771%, 5y -0.498%, 10y

-0.261%, 30y 0.098%

- Gilts have sold off with yields 2-9bp higher. The 10-year benchmark

underperforms. UK financial assets generally remain under pressure, with

equities still inching lower and cable now down to GBP1.1561.