EGBs made a slow move lower as..........>

EGB SUMMARY: EGBs made a slow move lower as trading got underway in the early

European morning. Over the course of the day, volumes were around 50% below the

10 day average. 

- There was a speech by Draghi that didn't really provide much in the way of new

information but the market noted his bullishness on the economy and Bund

contracts softened further.

- The selling faded soon after the speech and some bargain hunting materialised.

- Italy undertook an exchange auction, selling E2bln of the old 5.75% 2033 and

buying back 2018/2019 maturity paper. Perhaps these purchases were linked to the

somewhat rare occurrence of a short-dated BTP futures block, which saw a very

large 4.5k lifted.

- Early in the European afternoon, a further IK block was bought and by the end

of the day, the Italian market was the best performing EGB market.

- Heading into the close, the 10Y Bund yield was 0.7bp lower at 0.369% alongside

a very subtle flattening of the yield curve.