EGBs have recovered from a dip at the...>

EGB SUMMARY: EGBs have recovered from a dip at the start of Tuesday's trading.

Contacts ascribed the decline at the open to auction and supply concessions but

the truth is that today's supply has yet to really weigh the markets down and as

the auctions were ticked off, EGBs were able to recover.

- Dutch 6Y, Austrian 10Y and 30Y, German 30Y linkers led the EGB offerings

alongside KfW 10Y and Dexia 7Y in the government guaranteed space and there was

a 10Y Gilt to boot.

- Speculation is ripe that the Italian Treasury will soon announce a 20Y BTP

syndication.

- Economic data was second tier, headlined by some strong German trade surplus

numbers and this afternoon, the US offers little more than the start to the

week's coupon auctions (3Y today).

- Peripheral debt is marginally stronger than the core but spread movements are

small. At present, the 2Y Schatz is -0.5bp at -0.621% and the 10Y is also 0.5bp

lower at 0.425%.

- Flows have seen EUR swap paying in 10Y and a prevalence of steepener trades.