Long-end of Core/semi-core EGB..........>

EGB SUMMARY: Long-end of Core/semi-core EGB markets were already under pressure

before further selling was seen in the afternoon as US Treasures sold off

sharply. Traders highlighted a few factors, from increased 30-yr Bund issuance,

hawkish comments from ECB GC members and thin illiquid markets. German 10-yr

Bund yield is 6bp higher at 0.369%.

- 30-yr Bund and DSL's are 8bp higher while 30-yr OAT's & OLO's are up 9bps.

- Core/Semi-core EGBs were lower from the get-go, taking cue from steepening in

UST curve overnight and then weighed by ECB Hansson comments that need to adjust

communication in H1 2018. 

- There was no initial reaction to mixed German IFO numbers and release of BUBA

bond issuance outlook for 2018. However looking into the breakdown of the Bund

issuance, showed 30-yr would increase by E5bln compared to 2017 which weighed on

the long-end of French, German, Belgium and Dutch paper.

- ECB Weidmann repeated his call for QE to end in Sep 2018, while Makuch made a

rather vague remark that talks will turn towards rates rather than QE.

- EMU periphery are mixed, Spain & Portugal tighter, but Italy & Greece wider.