The EGB core-periphery divergence.......>

EGB SUMMARY: The EGB core-periphery divergence continues.

- Germany announced that it will reduce issuance for 2018 by E6bln to E175bn,

with a E2bln drop in bund issuance. This has provided further fuel to the bund

rally, with the benchmark 2-year yield dropping to -0.663%, down from -0.645% at

the open and hovering near the session's lows. The move in the 10-year has been

more aggressive, with the yield dropping to 0.349% from an intradary high of

0.387%.

- French OATs have been buoyed by two successful and well covered auctions this

morning, with E8.5bn in nominal bonds and E1.7bn in linkers sold. The French

curve has steepened slightly through the morning, with the 2s10s spread widening

to 125bps from 124bps at the open. The 2-year OAT yield has fallen to -0.572%

from a high of -0.559%.

-  Meanwhile, the 2-year BTP yield is trading at 0.793% from 0.564% at the open,

while the 10-year has traded up to 2.666% from 2.543% over the same period.

- The EURIBOR futures strip has flattened with Greens and Blues up 1.5-2.5

ticks.