EGBs, like other core bonds, are on.....>

EGB SUMMARY: EGBs, like other core bonds, are on the front foot this morning.

- Yesterday's news that Christine Lagarde has been nominated as Mario Draghi's

successor as President of the ECB has been interpreted by markets as a dovish

development. Although not much is known about her monetary policy views, her

nomination means that Bundersbank President Weidmann, considered one of the most

hawkish ECB members, will not take the helm. In addition, across the pond Trump

has named two new dovish nominations for the Fed board.

- Peripheral spreads have narrowed on these dovish developments but BTPs have

been the outperformers as it appears increasingly unlikely that the EU will not

impose sanctions for an EDP.

- Services PMIs released this morning were generally a touch better than

expected with Spain and Italy posting upside surprises.

- Bund futures are up 0.28 today at 173.63 with 10y Bund yields down -1.5bp at

-0.384% and Schatz yields up 0.6bp at -0.762%.

- BTP futures are up 1.63 today at 138.14 with 10y yields down -13.2bp at 1.705%

and 2y yields down -3.5bp at -0.15%.