The European morning was epitomised.....>

EGB SUMMARY: The European morning was epitomised by a risk-off move as the

European bourses collapsed. The exact reason for the equity fall may have

started with a fat-finger on Fiat stock or was perhaps a month-start asset

rebalancing. However, the move in equities catapulted European debt higher.

- Peripheral EGB spreads to the core are no longer sensitive to risk trades and

so widening to Germany was fairly limited.

- Again, there was much talk about the rise in eonia for a second day although

the movement today was more closely linked to month-end.

- As America woke up news started to trickle through that the tax reform was

gaining votes and this helped to reverse equity drops and took the wind out of

the debt market. Indeed, the afternoon session was mostly a US-led session.

- French OATs were particularly strong and helped by the AFT announcing a very

small 7Y+ auction for next Thursday. However, the Belgian debt market was a star

performer on Friday, which broke the 20bp support level that has proving

significant for several years.

- Heading into the close the 10Y Bund yield was down 1.8bp at 0.349%.