Italian spreads are tightening amid a...>

EGB SUMMARY: Italian spreads are tightening amid a broader EGB periphery rally,

despite Bund yields hitting fresh multi-year lows Wednesday morning.

- Jun Bund futures (RX) up 16 ticks at 167.96, hitting a new contract high at

168.04 as global stocks weakened. Equities off lows but EuroStoxx still off 1.4%

on the day (and looking very weak technically).

- Bund 2Y10Y and 2Y30Y spreads down 2.6bps each in a broad curve flattening,

with 10-Yr and 30-Yr yields hitting lowest levels since 2016.

- Solid Bobl auction this morning as well.

- Strong Italian May confidence data helped BTP/German 10-Yr spread move 5.3bps

tighter at 279.1bps, though still well off last week's close of 266bps.

- Spain, Portugal and Greece 10Ys all 3-4bps tighter to Bunds.

- ECB's Rehn commented this morning at a Reuters event that the first rise in

ECB rates is now further away than it was a few months ago.

- Euribor already reflects this outlook but futures today are fairly flat; up

0.5-1.0 ticks across the strip, with some mild bull flattening.