On Friday, the belly of the EGB curve...>

EGB SUMMARY: On Friday, the belly of the EGB curve was under heavy pressure,

initially sitting on the wrong side of 5-30Y flattener trades. Over the course

of the day, the 5-30Y Bund spread narrowed 5.3bp, although the move had been

larger in the morning. 

- The ECB Board member Benoit Coeure spoke quite hawkishly in Davos saying that

the ECB will have to focus more on the upside risks going forward and that

"forward guidance will have to evolve, we are in talks".  

- Increasingly difficult-to-predict Italian politics kept pressure on the

Italian BTP market. Auctions of CTZs and BTPeis were not remarkable or even

included much in the way of effective duration and did not weigh on the market.

Spanish debt was well bid in the 30Y sector as it will (alongside Germany and

Netherlands) see large month-end index extensions.

- The EGB markets did not react to the Eurozone M3 data in the morning, nor the

Trump speeches or US GDP data.

- Heading into the close, the 2Y is +1.6bp at -0.553%, 5Y +3.3bp at -0.041% 10Y

Bund +0.8bp to 0.62% but the 30Y yield is -1.4bp at 1.289%.