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Have had some questioning the.............>

EGB FLOWS
EGB FLOWS: Have had some questioning the tightening move in Italy 10-yr BTP
spreads vs German Bund and in the CDS market.
- Market source says that despite the uncertainty in Italy political situation,
there has been continued buying by domestics in the 3-yr to 10-yr sector of the
BTP curve as the carry is "still generous" and someone is "apparently
underwriting Italy".
- Also being told that there has been good interest in the grey market on the
new CCTeu that is being launched tomorrow.
- On the CDS spread, sources says this is highly correlated to the tightening
move in the BTP spread.
- Overall the source remained " a bit sceptical" on the level of the Bund/BTP
spread which is currently at 113.3bps, 1bp tighter on the day.

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