/GILT SUMMARY: Following yesterday's ECB.......>

EGBS: /GILT SUMMARY: Following yesterday's ECB meeting, Bundesbank President

Jens Weidmann has said that extending forward guidance was an appropriate

decision. 

- Core EGBs have got off to a mixed start while the periphery has rallied.

- Bund yields have inched higher, led by the long-end. Current yield levels:

2-year -0.662%, 5-year -0.582%, 10-year -0.230%, 30-year 0.367%.

- Italian BTPs have rallied strongly with yields 6-7bp lower on the day. The

curve trades close to flat. 

- The Spanish curve has flattened on the back of the long-end outperforming. The

2s30s spread is 3bp narrower.  

- UK PM Theresa May and Chancellor of the Exchequer Philip Hammond are locked in

disagreement over the outgoing leader's proposed Stg10bln spending boost (an

attempt to leave some sort of policy legacy beyond Brexit). Hammond is resisting

pressure to open the fiscal taps given uncertainty over Brexit. Ultimately, the

incoming Conservative leader could choose to reshuffle the cabinet and remove or

reposition Hammond. Gilts have weakened with yields broadly 2-3bp higher.