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Italian BTPs are slumping again on......>

EGB SUMMARY: Italian BTPs are slumping again on budget woes early Wednesday,
while Core EGBs have been the beneficiary of the flight to safety.
- The Dec 18 BTP future is down 36 ticks at 119.61 in what looks to be another
volatile session, with Deputy PMs Di Maio and Salvini doubling down Weds morning
on their commitment to the current budget plans.
- The Italian curve is bear flattening, with 2-Yr yield up 13bps at 1.515% and
10-Yr yield up 10.2bps at 3.578% - still off Tuesday`s highs.
- So far Bund Dec18 futures have traded in a tight range (157.95-158.16), last
down 7 ticks at 158.02. Curve has bull flattened slightly.
- Contagion across EGB periphery not yet a major issue though there is some
weakness Tuesday, spread of 10-Yr Spanish bonds vs Bunds up 2bps at 107.1bps,
Portugal up 1.2bps at 143.8bps, Greece out 2.7bps at 406.1bps.
- Data Weds includes IT and FR Industrial Production but nothing market-moving.
- ECB's Mersch participates in a MNI roundtable in Singapore at 0800GMT.
- EGB issuance today includes Germany (Aug-28 Bund for E3bln) and Portugal
(Oct-28 PGB for E0.75-1.0bln) - previews available on MNI Bullets.

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