EGBs traded in a wide range Tuesday,....>

EGB SUMMARY: EGBs traded in a wide range Tuesday, with a rally at the open

giving way to weakness as EMU inflation data surprised to the upside.

- The Bund curve has flattened, with Schatz and Bobl yields rising 1.5bps

apiece, and 10-Yrs and 30-Yrs up 0.1bps and and down 1.0bps, respectively.

- 10-Yrs traded in the widest range on the German curve, falling nearly 5bps to

0.409% at the cash open as Bank of Japan tightening fears abated, then selling

off over the course of the day, last up 0.1bps at 0.447%.

- Periphery EGBs had a very mixed day, with Greece blowing out on an IMF report

warning EMU governments that Greece will need more long-term debt relief in

order to successfully return to financial market funding post-bailout.

- Greek 10-Yr yields rose 9.3bps to 3.969%, widening 9.2bps vs Bunds at

352.4bps. This was in sharp relief to 10-Yrs elsewhere, including Italian BTPs

(4.2bps tighter), Spanish Oblis (in 2.1bps), and Portuguese PGBs (in 2.5bps).

- Relatively little activity on the Euribor futures strip, with the biggest

movement seen in the Red(Sep-19 to Jun-20) contracts, 1.0-1.5 ticks lower.

- Wednesday sees EMU manufacturing PMI, Bund auction, and US Fed decision.