Signals that Rome may be willing to.....>

EGB SUMMARY: Signals that Rome may be willing to bend to EU pressure on the

budget has seen BTPs surge and core EGBs weaken early Monday.

- BTP Dec18 futures have soared to highest levels since September, up 206 ticks

at 124.40 (high of 124.47 today). Massive rally across the curve, 2-Yr yield

down 27.2bps at 0.671%, 10-Yr is down 20.8bps at 3.199%.

- 2-Yr spread to Bunds down 30+bps (121.6bps), 10s in 25.4bps at 281bps.

- Headlines from BBG and RTRS this morning that Italy`s government is

considering targeting a smaller 2019 deficit (2.2-2.3% of GDP v 2.4% currently).

- Dec 18 Bund future is down 44 ticks at 160.66. 2-Yr yield is up 1.3bps at

-0.567%, 10-Yr up 2.8bps at 0.368%.

- Periphery spreads elsewhere narrower; Spain 10s in 6.5bps at 122.7bps,

Portugal down 6.2bps at 154bps, and Greece down 16.2bps at 405.2bps.

- Euribor futures weaker, 1.5-2.0bps off in Greens and Blues.

- Only key data today is Germany's November IFO at 0900GMT, noteworthy this

month given the recent negative GDP and PMI readings.

- Heavy slate of ECB speakers including Praet, Coeure, Nowotny, Draghi.