The ECB meeting should have been big....>

EGB SUMMARY: The ECB meeting should have been big the driver of EGBs but all it

did was to introduce volatility. Firstly prices dropped as the ECB released

stronger GDP forecasts and then rose as the HICP forecasts were revised lower.

The important 2020 HICP forecasts reached only 1.7%. However, contacts pointed

out to us that H2 2020 rises to 1.8% and core inflation in 2020 is at 1.8%.

- The European outlook has improved and perhaps for this reason, the weakness in

5Y EGBs seen earlier in the day was maintained after the press conference.

- The 10Y Bund yield was +1.4bp on the day at 0.329%, a similar rise was seen in

the 2Y but the 5Y Obl was +2.6bp.

- Peripheral debt had a strong day, with Spanish debt rallying strongly in the

aftermath of its auction. The Spanish debt agency allocated just 3bln, at the

bottom of the E3-4bln range. The 10Y Greek spread to Germany  tightened 14bp,

far out-doing the 4-5bp compression in Boos and PGB spreads. Interestingly, 30Y

Italian debt was weak.

- Note that there is a E13bln Schatz redemption on Friday and Italian exchange

auction.