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EGBs have been pulled lower by an.......>

EGB SUMMARY
EGB SUMMARY: EGBs have been pulled lower by an unexpected source, an explosion
at the Baumgarten gas hub in Austria, which threatens gas supplies throughout
many parts of Europe.
- As news of the blast filtered through, the future impact upon CPI and the
economies weighed upon European government paper, dragging Bunds to the lows of
the day.
- However, it was the BTP contract that exhibited the sharpest correction and
the Italian government has subsequently declared a state of emergency. Italian
wholesale day-ahead gas prices surged 87%.
- The Bund-BTP spread had been 2bp tighter before the news but gave that back in
the aftermath of the news.
- The German ZEW for Dec was close to expectations at 89.3 for current
conditions and 17.4 for expectations.
- The German 2Y Schatz auction was small and easily sold at around 1 cent
premium to the market.
- The Greek 10Y spread to Germany is a decent 10bp tighter at 413bp.

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