Most attention has been upon the Gilt...>

EGB SUMMARY: Most attention has been upon the Gilt market on Monday and EGBs

have largely responded to movements there. Indeed, EGB movements have been very

muted and the 10Y Bund yield is just 0.7bp higher at 0.578% and the yield curve

has twisted slightly with a 0.4bp decline.

- There was quite strong demand for the Belgian 5Y/10Y/15Y/50Y auction this

morning, particularly for the 3 shorter legs. In total, Belgium sold E5.81bln.

Slovakia also sold 170mln at their relative small auctions today.

- Italian and Spanish paper are outperforming the core markets by 1-2bp across

the curve. After the close on Friday, it seemed that the 5-Star movement had

dropped its pledge for fund spending with higher deficits.

- Italian industrial production data showed a moderation in annual growth to

4.0%Y/Y in January from 5.4%Y/Y in December.

- Swap flows have been very active today, mostly outright. Payers seen in the

5-7Y section of the curve.