Emerging market-led volatility hit......>

EGB SUMMARY: Emerging market-led volatility hit EGB periphery bonds hard, with

Italy underperforming amid added concerns surrounding budget negotiations.

- Core EGBs rallied early in a continuation of Friday`s risk-off move, but have

since moved weaker. The German curve is steeper, with 2-Yr yields down 0.3bps,

and 10-Yrs and 30-Yrs up 0.9bps and 1.2bps, respectively.

- French OAT spreads are slightly wider, with the 10-Yr out 1.5bps at 36.3bps,

highest since June 29. 

- Periphery spreads have recovered slightly from intraday highs, which marked

the widest levels vs Bunds since May`s crisis (in Spain and Italy's cases).

10-Yr spreads are out 5.5bps in Italy, 3.7bps in Spain, and 3.6bps in Portugal.

- The Italian BTP curve is bear flattening. 2s30s having the biggest move down

15bps at 203.6bps, with 10s30s down 7.7bps at 42.0bps, touching July lows.

- In contrast with the significant move seen across RGBs, Euribor futures have

been relatively quiet, with a few contracts up 0.5 ticks.

- Data flow picks up Tuesday after a relatively slow week, with German flash Q2

GDP and ZEW survey, as well as EMU GDP and Jun industrial production.