EGBs were pushed around by flows,.......>

EGB SUMMARY: EGBs were pushed around by flows, rather than news on Monday. There

was considerable flow at the front end of the curve in early trade both in the

Schatz and paying activity in the swap curve. Additionally, early trade was

driven by talk of Japanese lifers buying French and German debt.

- The move higher collapsed quickly and then went few a more, largely

flow-driven oscillations before settling down.

- The Italian market was well-bid in the morning, responding to the Treasury's

announcement on Friday that Thursday medium and long term auction would not

include a 5Y and instead would be very small. That Italian supply surprise ran

out of legs and the 2.5bp Bund-BTP spread tightening was unwound completely by

the European lunchtime. 

- The German curve headed into the close with a fairly parallel 1bp declined

from 2-30Y. The 10Y Bund yield was at 0.35%.

- Italy successfully sold E2bln of its 2Y CTZ benchmark. Core-periphery spreads

were close to unchanged, although Irish debt did see a 1bp tightening to

Germany, very interesting given the political backdrop.