Italian bonds have rallied while........>

EGB SUMMARY: Italian bonds have rallied while Bunds have pared early gains in a

modestly risk-on session Wednesday amid fairly light news and data flow.

- BTPs have jumped on reassuring comments from PM Conte on the forthcoming

government budget. 2-Yr yields are 5.7bps lower at 0.851%, 10-Yrs down 5.3bps.

- Bund yields are slightly lower after trading up-and-down in a fairly tight

range. The curve is slightly steeper, with 10-Yr yields down 0.4bps at 0.404%,

and 2s and 5s down 0.6bps and 0.4bps, respectively.

- French OATs are lagging slightly, with the 10-Yr yield down 0.2bps at 0.727%,

spread over Bunds widening 0.2bps.

- Periphery spreads to Bunds are fairly flat with the exception of Italy,

however. Spanish bonds are underperforming, with yields fairly flat, and 10-Yr

spreads wider to Bunds by 0.3bps at 98.9bps.

- Euribor futures are up 0.5-1.0 ticks across most of the strip, in light

volumes. Short-dated contracts are lagging, Dec8 down 0.5 ticks.

- Very light data for the rest of the week, highlighted by French industrial

production on Friday.