Peripheral debt has taken a small hit...>

EGB SUMMARY: Peripheral debt has taken a small hit from the results of the

German election. The election result that makes a Jamaica coalition fairly

likely and is not seen as encouraging for further European integration.

- The Liberal FDP, which might be part of the coalition are particularly against

enhanced power of the ESM. However, so far today, there is no obvious reaction

from EFSF/ESM spreads to Germany.

- The German 10Y yield started slightly lower but has traded back to unchanged.

Spanish and Italian 10Y spreads to Germany are 3.9bp and 4.1bp wider

respectively.

- The Euro took a small hit. On Friday, it closed at 1.1940 against the dollar

and is currently at 1.191. 

- Overall, the election impact upon markets is fairly muted but now, it seems

that everyone is re-directing attention to the 1-O referendum in Catalonia.

- Attention is on IFO later but the German PMI often takes the wind out of the

sails of the IFO. Draghi is due to speak to the European Parliament at 1300GMT,

there is no supply until tomorrow.