Late European morning headlines that....>

EGB SUMMARY: Late European morning headlines that North Korea will hold a Summit

with South Korea in April along other headlines led core and semi core EGB

markets lower in price fairly rapidly. However, even before these shocking

headline, the Bund was softer and peripheral markets were strong. 

- There was no clarification on the state of Italian politics but the bear

trades were not making much money and BTP buying continued from yesterday and

eventually, there was a spate of stop-losses that drove the Bund-BTP spread

tighter. A market contact suggested that IKH8 contract shorts were simply no

rolled into the IKM8 and this precipitated the sudden price move. 

- German linker auctions had mixed results, the Bundi26 was strongly bid, the

Bundei30 was weak. Austria 4Y and 10Y nominal auctions were fairly average.

- There was no economic data of note.

- Heading into the close, the 10Y Bund yield was 4.0bp higher at 0.683% with a

steeper curve and the Bund-BTP spread is 6.7bp tighter at 129.3bp although other

peripheral markets tightened more aggressively. The Bund-Tsy spread narrowed

significantly to 223.7bp, slightly below the recent all-time high of 231bp.