EGBs look set to close mixed, curves....>

EGB SUMMARY: EGBs look set to close mixed, curves modestly steeper in a rather

subdued start to the trading week with US closed for Martin Luther King Jr day

holiday. German 2-yr yield is -1bp at -0.579%, while 10-yr is 0.1bp higher at

0.582%.

- The clear underperformer today has been the long-end of Italy and Spain with

30-yr yields 4.9bp and 4.3bp higher respectively weighed by possible further

syndication deals in the pipeline. While short-end has been anchored by ECB

Weidmann comments from Friday.

- Announcements by Belgium of a new 10-yr syndicated Euro deal and a new 5-yr

Swedish Euro deal weighed on Bunds in the afternoon. Belgium current 10-yr held

relatively steady however, 30-yr Olo is 1.5bp higher.

- With limited UK and Eurozone data today, markets attention has been on the

steady rise in the Euro (or rather softness in the US Dollar) and the political

ramifications of possible German grand coalition.

- Markets concern is what effect the recent rise in Euro/Dollar will do to

Eurozone inflation and will the ECB try and talk the currency down.