It took a while, but the reaction to....>

EGB SUMMARY: It took a while, but the reaction to a dovish press conference

finally materialised. It was as dovish as could have been hoped. Nothing was

changed in September, all decisions pushed to October. The FX rate was raised to

a level of importance rarely seen at an ECB press conference.

- Draghi's words unleashed the Bund, which eventually set a new high for the

week. The 10Y Bund yield was close to 4bp lower on the session. However,

Draghi's 70th birthday present should have been a BTP, because the 10Y Bund-BTP

spread fell 5bp.

- The only market to underperform Germany was Austria as it admitted to E4bln

higher funding needs for the final 3.5 months of the year.

- Ireland is also threatening higher IGB funding by paying back some IMF loans

early. This is just a proposal at present but held back the Green curve too.

- The market got through Spanish and French auctions but bidding was nothing

exceptional; French bids even looked a little light.

- The Bund yield is now at its lowest since June 26 at 0.306% and PINCH

estimates that chances of rate cuts are now higher than a hike in near term.