Italian BTPs stand out as a loser in....>

EGB SUMMARY: Italian BTPs stand out as a loser in an otherwise positive day for

EGBs and rates, which in a thin day for EMU data have been boosted by a dovish

tone from the Bank of England and US CPI data on the soft side.

- Bullish day for the German curve, with 1.2bps of flattening on 2s-10s as the

Schatz Jun18 future is up by a 1.5-2 ticks and Bund Jun18s up 33 ticks.

- Jun18 BTP futures, in contrast, are off 40 ticks. Spreads have come off their

highs since mid-afternoon but remain elevated as word is awaited on a potential

populist coalition forming between 5-Star and League. 10-yrs have widened 5.5bps

on the day vs Bunds at 137.7bps, 1.2bps below the intraday high but still

underperforming Spain (out 1.5bps) and Portugal (out 1.6bps).

- Alongside a similar trend in global rates, the Euribor futures curve has

flattened, with whites down a tick and reds flat, and greens and blues down

1.5-2.5 ticks.

- Tone for the next few days could be set by Italy. Conflicting reports that a

new government will have to be settled by Sun or Mon, plus auction of 3, 7, and

15-yr BTPs Friday at 0900GMT. ECB's Draghi speaks in Florence at 1315GMT.