Italy has opened sharply higher supported by...>

EGBS: Italy has opened sharply higher supported by comments from Italy's

European Affairs Minister Paolo Savona. The rest of the EGBs have also edged

higher this morning, but are lagging BTPs. German 10-yr Bund yield is 0.5bp

lower at 0.483%, with yield curve modestly flatter as short-end remains anchored

ahead of Fed/ECB monetary policy decisions.

- Italian curve has bull steepened as largest move lower in yields is seen in

the short-end as Savona says that the "euro not only has positive aspects, but

indispensable ones". Savona went on to say that construction of the single

market is limited and needs to be perfected with the ECB equipped with similar

statute to that of the Federal Reserve. 2-yr BTP yield is 12bp lower at 0.904%

and 10-yr 8bp lower at 2.783%.

- Eurozone data is limited to Eurozone industrial production data at 0900GMT, so

attention will first be on UK inflation data and then FOMC monetary policy

decision later today, with rates expected to rise 25bps. Markets also seen

positioning ahead of key ECB GC meeting tomorrow.

- White and red Euribor contracts are 0.5 to 1 tick higher.