Risk appetite has picked up slightly....>

EGB SUMMARY: Risk appetite has picked up slightly in Europe today, seemingly

batting aside the EBCs concern about Italian banks as periphery EGBs

outperforming core EGBs. 

- The Mar 19 BTP future is up 55 ticks at 127.2, having traded in a range of

126.69-127.34 today.

- The rally has been driven by the belly where the 5-yr yield is down 7.6bps at

1.703%, there has been a moderate 0.8bps bull flattening in the 2s10s with the

2-yr down 5.6bps and 10-yr down 6.4bps. The ultra long end is the big

underperformer, with 30-yr yields down just 2.7bps. 

- Bunds have sold off since mid-morning and are now down 38 ticks on the day

trading at 164.51. 

- Steepening has occurred throughout the curve with the 2-Yr yield up 1.2bps at

-0.607%, 5-Yr up 1.9bps at -0.376%, 10-Yr up 2.3bps at 0.229%, and 30-Yr up

3.1bps at 0.854%. 

- Elsewhere the sell off in Bunds has been superseded by Portuguese bonds,

pushing the 10-yr PGB spread Vs Bunds 10.8bps up to 156.1bps.