EGBs opened on the soft side and then...>

EGB SUMMARY: EGBs opened on the soft side and then at around 8am London time

came under steady selling pressure as European equity markets took positives

from limited reaction from Russia and Iran following weekend missile strikes in

Syria and talk of Europe opening trade talks with the US. German 10-yr Bund

yield is 3.5bp higher at 0.546%.

- There are some large redemption payments from Germany and Italy scheduled this

week which should in theory limit downside movement in EGB bonds however.

- Data has been thin on the ground so far Monday, so flows have been light and

therefore prices have been driven by the futures market. Data does not pick up

much for the rest of the week, so attention likely on ECB policy makers and

current geopolitical situation in Mid-East and world trade.

- EMU periphery are fairing slightly better then core markets supported by the

risk-on sentiment with both Spain and Italy 10-yr yield spread to German between

1.6bp and 2.2bp tighter respectively. There is still no political solution in

Italy with 2nd round of talks failing to overcome the impasse between M5S and

centre right coalition.