Risky assets have performed poorly......>

EGB SUMMARY: Risky assets have performed poorly overnight but there is very

little love being felt in the core bond markets. It took a very weak Saxon CPI

release to push yields lower and the -0.8% monthly decline quickly led to a 25

cent jump in the Bund contract. However, much of the weakness was due to the

very volatile package holiday category and it is only one State. The yield curve

has flattened as the Saxon data were released. 

- So far, there is little movement in the peripheral spreads to Germany. Later

this morning, Italy sells 3Y, a new 10Y and 50Y BTPs alongside a CCTeu auction.

Some of this supply will be cushioned by the massive coupon and redemption flows

from the periphery this week.

- The data side is quite busy with the remainder of the German State CPIs

followed by the German National number at 1300GMT. Eurozone GDP is at 1000GMT

and this comes alongside the much-watched Eurozone Economic Confidence data. In

the US, Trump will make his State of the Union Address this evening but the US

data calendar is limited to Case Shiller house prices and consumer confidence.