It was a volatile day for EGBs with.....>

EGB SUMMARY: It was a volatile day for EGBs with the slow reaction to the German

election result soon giving way to a decent rally as stop-losses were triggered.

- Initially, the rally in the Bund was not followed by the periphery and spreads

widened by 4-5bp against 10-Year Germany but that quickly came back. Some market

commentators believed that the German coalition uncertainty might delay the ECB

in dialling back the stimulus. In the afternoon, Draghi said that 'very

substantial' monetary policy support was still needed. 

- His comments helped to reverse some of the Bund weakness that had set in

around the European lunchtime and allowed the Bund yield to go into the close

around 3.4bp lower at 0.413%.

- Peripheral debt widened as concerns mounted through the day that the European

fiscal burden sharing reform would slow or halt because of the German election.

- Economic data was limited to a slightly weaker-than-expected German IFO

numbers that hit as the market was distracted by the German election effect.