- The early morning rally in German.....>

EGB SUMMARY: - The early morning rally in German bunds has lost momentum over

the past hour. The benchmark 2-year bund yield has traded down to -0.586% from

-0.573% while the 10-year yield is down to 0.464% from 0.489%. The curve has

also steepened over the past hour with the 2s10s spread pushing up to 104.4bps

from a low of 103.2bps.

- The flattening of the French OAT curve has similarly reversed slightly. The

2s10s spread has traded up to 121.9bps from 120.9bps.

- Italian BTPs have sold off through the session with yields near the day's

highs. The 2-year BTP yield has surged to 1.318% from a low of 1.1795% while the

10-year yield has pushed up to 3.520% from 3.383%. According to an article in

Spiegel, the EU Commission is expected to reject Italy's 2019 draft budget.

- As a result of the longer end underperforming the Spanish curve has steepened

with the 2s10s spread up 2bps from the afternoon low.

- The Euribor futures strip has flattened with greens/blues up 3.0-3.5 ticks.