Licking their wounds from late last.....>

EGB SUMMARY: Licking their wounds from late last week, EGBs are staging a

mini-recovery. The 10Y Bund yield is 1.3bp lower at 0.438% but the move is more

than simple bargain hunting. 

- This week, there is a massive imbalance between cash inflows (mainly ECB

buying and E50bln of French redemptions and coupons) and supply. Inconveniently,

the ECB meeting occurs on Thursday otherwise, participants might feel more

confident about putting the money to work.

- Over the weekend, Spain's central government took steps to remove some power

from Catalonia. There is a vote in the Senate set for Friday and this week

Catalonian politicians must choose their own reaction.

- News from Spain is having surprisingly little impact upon government bond

trading with the Bund-Bonos spread just 1.3bp higher at 122.2bp.

- Lombardy and Veneto also voted (in legal but non-binding polls) in favour more

autonomy from the Italian central government. The vote was considered more of

publicity stunt than having real implications but did strengthen the Northern

League's hand ahead of national elections.