EGBs sank at the open as risk...........>

EGB SUMMARY: EGBs sank at the open as risk appetite returned to the markets.

This weakness was faded as the day wore on but there at around lunchtime,

sellers hit the very long end of the yield curve. 

- The 10-30Y German spread widened by around 1.7bp over the course of the day.

- Peripheral debt was strong...again. The Greek market appears to be coming back

to life and the 10Y spread fell 10bp to 504bp as newspaper reports suggested

that Greece would sell 3Y and 10Y debt next year. 

- ECB PSPP data showed that the ECB had another deviation from capital keys;

under-buying by around E600mln. Surprisingly, even Italian paper was

under-bought and this gave a small push to Italian debt.

- Italian debt has also outperformed despite worrying threats in Italy to

reverse the 'Fornero' State pension laws that gradually increased the retirement

age. Parties are busy promising to lower the state pension age and increase

pension benefits.

- Attention has also been focussed upon Brexit and there is chatter about a

joint UK/EU statement any moment.