Markets have shifted to a risk-on......>

BOND SUMMARY: Markets have shifted to a risk-on position today with core EGB's

trading weaker alongside a rally in periphery debt, the dollar is on the back

foot against G10 currencies and equities are pushing higher.

- The agreement among the 27 EU member states on the recovery fund and

seven-year budget has been the main market-positive development. Despite a

contentious round of negotiations and many concessions (including a reduction in

grants on offer to EUR390bn from EUR500bn initially), EU states have

collectively backed a EUR750bn package.

- Bunds have sold off slightly with cash yields ~1bp higher.

- OATs trade in line with bunds. Current yields: 2-year -0.6215%, 5-year

-0.5384%, 10-year -0.1571%, 30-year 0.5623%.

- BTPs have rallied with yields 2-3bp lower on the day.

- Supply this morning came from Germany (Schatz, EUR4.08bn) and the UK (Gilts,

GBP5.25bn).

- The data calendar has been light today with UK public finance data being the

only significant release.