The Brexit negotiation has dominated....>

EGB SUMMARY: The Brexit negotiation has dominated a holiday-effected European

trading session. UK Gilt yields are around 6bp higher and Brexit optimism has

depressed many EGB markets. The 10Y Bund yield is +1.5bp at 0.308%, with the

curve steepening.

- Lower quality government credits have performed strongly this morning as the

impact of the lack of new rules for the treatment of government bonds in

yesterday's Basel III announcement filters through. Governments keep their

preferential treatment and Greek debt is 20bp lower in yield today without any

domestic news.

- The Bund-BTP spread has hit 14 month lows with a 3.5bp compression to 135bp

and the Bund-Bonos spread has also breached 25bp.

- German trade data for October showed a shrinkage to E18.9bln from 24.21bln as

exports shrank 0.4%M/M but imports rose 1.8%M/M.

- Italy, Spain, Portugal and parts of Switzerland are shut today.

- Early EUR swap flow showed curve trades were dominated by flatteners.