Italian BTPs are down sharply on more...>

EGB SUMMARY: Italian BTPs are down sharply on more tensions between Rome and

Brussels, with core EGBs benefiting from a flight to safety.

- The Dec 18 BTP future is down 172 ticks at 121, having traded in a range of

120.89-121.75 today, with 10-Yr Italian BTPs/Bund spread up 19.2bps at 302bps.

10-Yr yield at 3.424% is on the cusp of breaking the May high.

- Lower house budget committee chair Borghi said Italy could resolve its debt

problems with its own currency, with the euro being `not sufficient`.

- PM Conte is to meet with key ministers at 1700GMT, Reuters reported. Deputy PM

Di Maio said the government would finalise the 2019-21 budget Tuesday, and Ansa

reported him saying the fiscal plan would be presented to parliament Wednesday.

- Amid these concerns, the Dec 18 Bund future is up 87 ticks at 159.64. 10-Yr

yields outperforming the curve, down 5.3bps at 0.418%.

- Periphery EGB spreads wider but far less than Italy: Spain 10-Yr up 5.3bps at

111.2bps, Portugal up 4.9bps at 148bps, and Greece up 10.2bps at 385.1bps.

- Fairly quiet data day, EMU Aug PPI data at 0900GMT. At the same time, Austria

sells 5- and 10-Yr  RAGBs for total E1.15bln.