Following the weekend elections in Italy,......>

EGBS: Following the weekend elections in Italy, the yen strengthened (very

slightly), Euro dropped and core global bond yields fell. Treasuries took part

in the process and on Friday the 10Y yield was trading at 2.86% but at one stage

in early European trading, it had fallen to 2.81%.

- However, despite the indisputably market-unfriendly election result for Italy,

the political threat was quickly brushed aside. Italian debt came back rapidly,

allowing core bond yields to rise and the UST 10Y is back to 2.842%. This

represents a 2.2bp decline from the NY close and the curve move has been fairly

parallel.

- The risk-off trade is no longer obvious as 2-5Y swap spreads have declined

relative to Friday. The 3Y leads with a 0.5bp drop to 21.5bp.

- The S&P mini index future points to a 0.17% decline at the open of US stock

trading. 

- It is payroll week but today's data has only the ISM service sector data for

February.