The ECB surprised the market today......>

EGB SUMMARY: The ECB surprised the market today with a new TLTRO (most analysts

did not expect a formal announcement at the March meeting), a revision to

interest rate forward guidance (again, not widely expected for this meeting), a

substantial downgrade to 2019 GDP growth (1.1% vs 1.7%) and an across the board

cut in the medium-term inflation forecasts (2019 1.2% [1.6%); 2020 1.5% [1.7%];

2021 1.6% [1.8%]).

- The German bund curve has steepened on the back of the long-end outperforming.

The 10-year yield is down 5.9bps on the day, while the 2s10s spread has narrowed

to 61.1bps from a high of 65.88bps.

- It is a similar story for French OATs, although the magnitude of yield

compression has been higher. The 10-year yield is down 8.2bps on the day and

2s10s has narrowed 5.5bps.

- BTPs have been the big mover on the day with the 5-year benchmark yield down

12.2bps from yesterday.

- The Euribor futures strip has steepened sharply. Greens/blues are up 6.5-7.5

ticks.