Risk sentiment has improved overnight and......>

EGBS: Risk sentiment has improved overnight and this morning as Italy's

President Mattarella gives more time for the anti-establishment parties to come

up with a more agreeable cabinet. News that Savona might be Foreign Minister has

also underpinned risk-on sentiment.

- German 10-yr Bund yield is 3bp higher at 0.366% according to Tradeweb while

10-yr Bund/BTP spread is 20.1bp tighter at 249.1bps.

- Core/Semi-core EGBs are also seen weighed by higher than expected French flash

May inflation data, with HICP rising to 2.3% y/y from 1.8% y/y. Overall Eurozone

flash inflation is released at 0900GMT and markets are already pricing a much

higher rate than current consensus of 1.6% y/y.

- Euribor strip is coming under decent selling pressure this morning with green

and blue contracts falling between 2.5 and 4 ticks. White contracts though are

1.5 to 2.5 ticks higher.