EGBS have opened with a risk-on tone,..........>

EGBS: EGBS have opened with a risk-on tone, supported by encouraging commentary

out of Italy that suggests a last ditch effort to form a government in underway.

While flash inflation data from German region of Saxony and Spain and German

retail sales have all surprised to the upside. German 10-yr Bund yield is 7.1bp

higher at 0.331% and 10-yr Bund/BTP spread is 17.3bp tighter at 273.1bps.

- The leader of 5SM, Luigi Di Maio, hinted that he is ready to work with the

President's office while Lega's Salvini has reportedly said its possible to have

Giorgetti as PM and willing to work with 5SM. 2-yr BTP yield has seen the

sharpest move with yield falling 45.7bps to 2.308%.

- Data has also been hitting the wires and adding to risk-on sentiment, with

German region of Saxony flash inflation jumping to 2.2% y/y from 1.6% y/y and

Spain's rising to 2.1% y/y from 1.1% y/y. While German retail sales rose by 2.3%

in April, much higher than the 0.5% expected.

- The one downside was 2nd estimate of French Q1 GDP that was revised down to

0.2% q/q from 0.3% q/q.

- Italy comes to the bond market today with tap of 5-yr and 10-yr BTPs