European debt markets on moving.........>

EGB SUMMARY: European debt markets on moving higher this morning and the reasons

are numerous:

- Month-end asset rebalancing will strongly favours bonds over equities, bond

index month-end duration extensions are supportive with a large 0.08Y rise in

the Bloomberg-Barclays Euro Treasury index. There is a E19.5bln redemption in

Spain today and very little in the way of supply, just E4bln of 5Y debt from

Germany.

- The move higher in EGBs might have been larger but for a large French CPI beat

that was only partially offset by Spanish inflation coming in slightly below the

consensus.

- French HICP rose to 1.5%Y/Y in January from 1.2%Y/Y and compared to consensus

of 1.1%Y/Y.

- The 10Y Bund yield is -1.1bp at 0.673%, despite small strength in European

equity markets first thing this morning, with little change in the yield curve

shape.

- Peripheral debt markets are strong, generally tightening 1bp to Germany at 10Y