EGBs started poorly on Tuesday but......>

EGB SUMMARY: EGBs started poorly on Tuesday but the problems are mostly

concentrated in the front end of the dollar curve. The US market wakes up to 3

frenetic issuance days US that will see $258bln of supply including bills,

Treasury-FRN and 2/5/7Y coupons.

- As hedging began for the US supply, the Bund contract traded down to 157.90

before buying materialised in Europe. The Spanish 30Y deal was opened and

quickly attracted a massive E22.5bln order book according to the most recent

update.

- The story was the opposite at the front end of the German curve as the 2Y

Schatz auction was just about technically uncovered although there was limited

market reaction owing to this being a common theme. The 2Y Dec-19 Schatz is

unchanged at -0.57%, the 10Y Bund yield is +0.4bp at 0.769%. Greek debt is weak.

- The German ZEW current situation softened from extremely elevated levels,

although the expectations component nudged higher.

- At the close of business tonight, Italy should announce bonds for Friday's

auction.