It has been a day of two halves.........>

EGB SUMMARY: It has been a day of two halves today, particularly for peripheral

EGBs.

- Up until around 9:30GMT London time, bonds were selling off across the world,

Bunds were no exception and peripherals were particularly hard hit. At one point

2-year BTP-Schatz spreads had moved more than 40bp wider.

- EGBs then began to stabilise following an MNI headline that a source close to

Eurogroup discussions had said that Eurozone finance ministers are looking at

ways to use the ESM to stabilise markets. This was followed up by a Reuters

report that ESCB were intervening in bond markets already according to a Bank of

Italy source. Bloomberg then published a story backing up the earlier MNI story

before another MNI story suggested that Italian politicians were pouring cold

water on the potential use of the ESM. Peripheral spreads have stabilised

following this last headline.

- Bund futures are down -2.99 today at 168.94 with BTP futures up 1.23 at 131.96

and OAT futures down -1.28 at 161.96.

- 2-year BTP spreads are almost 30bp tighter on the day at the time of writing.