The EGB market is almost a replica of...>

EGB SUMMARY: The EGB market is almost a replica of yesterday with the Bund and

other core markets going through a number of oscillations but with little in the

way of net yield change. However, the BTP market has taken another significant

hit.

- The morning's bond trading started poorly in Europe with strong PMI data for

Germany being the principal reason for the drop in EGB prices. 

- A speech by Draghi provided no insight upon current monetary policy but very

soon after the speech was published on the ECB website, the BTP market ran into

some quick selling. The Bund-BTP spread has widened by 4bp to 174bp and Italian

debt took the Portuguese market with it. The Spanish debt market somewhat

side-stepped the pressure but, not entirely.

- There has been considerable swap activity in the 4 and 5Y section of the EUR

curve, most of which appears to be receiving.

- Germany sold E3bln of 10Y paper this morning but the bids (E3.086bln) only

just squeaked over the amount being sold in what was a very disappointing

auction.