Rates and bonds have reversed the.......>

EGB SUMMARY: Rates and bonds have reversed the earlier gains made following an

apparent row-back on the ECB`s inflation outlook.

- ECB's Praet talked down the importance of Draghi's hawkish tones in Brussels

yesterday, which led to a brief rally in Euribor futures and core EGBs, but

these gains have since dissipated.

- The Dec 18 Bund future is down 33 ticks at 157.99, having traded in a range of

157.85-158.21 today. The curve has bear steepened slightly, with the 2-Yr yield

is up 0.5bps at -0.503%, and 10-Yr up 2.4bps at 0.534%.

- Italian BTPs remain near their highs on budget optimism. The 2-Yr yield is

down 10.1bps at 0.791% while 10s are down 10.2bps at 2.847%.

- While 10-Yr BTPs are in 12.5bps vs Bunds, they are closely followed by Greece,

in 9.3bps.

- Longer-dated Euribor futures (Sep21-Sep22) are 3.5-4.0 ticks lower.

- Supply this morning included Italy selling E2.75bln of CTZ/BTPei and the

Netherlands` selling E2.12bln  of DSL 0.00% Jan-24.

- ECB's Coeure set to speak in Frankfurt at 1600GMT.