Prompted by the weak equity market......>

EGB SUMMARY: Prompted by the weak equity market overnight, there was an

extremely bullish start to Wednesday. Several explanations for the strength were

provided, mostly linked to technical levels giving way but strong gilts,

upcoming month-end extensions and large cash inflows in April were also

provided. Prices peaked just before 9am London time and quickly fell away as

equities recovered losses.

- France sold E3.5bln 18Y OATei at OATei 0.70% Jul-30 + 27bp. There was an

E11.5bln book.

- Italy sold CCTeu, BTP 5Y and BTP 10Y. The first two saw a decent bid but the

10Y BTP was weak and in the moments into the bidding deadline the BTP market

fell sharply. Much has been recouped at the Bund-BTP spread is little changed on

the day.

- In the afternoon, selling centred on the Schatz and investors were also

watching the US curve become even more pancake-like. BTPs were outperforming

with the supply out of the way.

- Bund yields were little changed on the day by the close.