- German bunds have rallied since.......>

EGB SUMMARY: - German bunds have rallied since early morning, but have pulled

back over the last hour. The benchmark 10-year bund trades at a yield of 0.462%

down from a high of 0.504% and the 2-year yield has pushed down to -0.528% from

-0.511%. The curve has also flattened with the 2s10s spread narrowing to 98.3bps

down from 101.1bps.

- French OATs have similarly rallied and the curve has flattened. The 10-year

OAT trades at a yield of 0.791% down from 0.833%.

- The fallout from the Italian budget continues to rumble on with BTPs selling

off across the curve. Having surged to a high of 1.229% the 2-year BTP yield has

fallen back to 1.121%, up from a morning low of 0.810%.

- There has been a sharp sell off at the shorter end of the Spanish curve over

the past hour. The 2-year trades at a yield of -0.217% up from -0.243%.

- The Euribor futures strip has flattened with greens/blues up 4.5-5.0 ticks.