EGBs had a positive handover from.......>

EGB SUMMARY: EGBs had a positive handover from overnight price action but the

upward move failed to stick. Bund yield last +0.5bp at 0.624%.

- Lots of headlines coming from the ECB-watchers conference in Frankfurt. EGB

weakness in early Europe as ECB watchers conference delivered a subtle hawkish

message delivered in a more academic way by Draghi, principally saying that the

Philipps curve is making a comeback.

- The weakness continued all morning and heading into the German and Portuguese

auction the move downward accelerated, led by the Bund 2048 that was being

auctioned. Results showed a particularly poor auction and a re-distribution

trade developed as nearly every auction bid was filled.

- The Portuguese 10 and 30Y auctions were fairly average although the 30Y bid

was a little light. Peripheral debt has widened from the long end of the curve.

Spain is leading the widening as Rajoy promises pension increases of 3%.

- Market now looking ahead to further ECB watcher headlines and US retail sales

out later today. Possible market prepping for French and Spanish auctions

tomorrow.