Italian BTPs face renewed pressure as...>

EGB SUMMARY: Italian BTPs face renewed pressure as Rome squares off with

Brussels over the government's budget plans. Adding further fuel to the fire,

Michel Barnier stated that Italy must understand its debt concerns all of the

EU. The initial sell-off in BTPs has reversed, but with little sign of the

government backing down on its budget proposals, this is likely to prove short

lived. The 2-year BTP trades at 1.515% from a high of 1.567%.

- German bunds start the session on a weaker note with the benchmark 10-year

yield edging up to 0.421% from 0.412%. The curve is a touch steeper with the

2s10s spread inching up to 103.4bps from 102.0bps.

- The French curve has steepened sharply as a result of the shorter end rallying

at the open and the longer end selling off. The 2-year OAT trades at -0.423%

from -0.4412% while the 10-year yield is up to 0.810% from 0.798%. The 2s10s

spread has widened to 122.3bps from 118.7bps.

- The Euribor futures strip has steepened with whites down 0.5-1.0 ticks,

reds/greens flat, blues up 0.5 ticks.

- The euro area data calendar is light today.