- The German bund curve has steepened...>

EGB SUMMARY: - The German bund curve has steepened with the 2s10s spread

widening to 84.3bps from a low of 82.2bps. Breakevens have inched higher with

the 5-year benchmark trading at 0.950% up from 0.940%.

- The early morning rally in French OATs has reversed with yields near the

high's of the days. The sell- off has been sharpest at the long-end, with the

10-year yield pushing up to 0.727% from 0.6895% and the 2s10s spread widening to

115.5bps from 112.3bps.

- Italian BTP yields started to drift lower from mid-morning and took a sharp

leg down from 1235GMT following speculation that the government will propose a

2% deficit to the EU. The 7-year benchmark has outperformed the curve with the

yield down 13.1bps on the day.

- There has been tight trading in the front-end of the Spanish curve while the

longer-end has sold off since 1300GMT. The curve has steepened with 2s10s

trading up 4bps.

- Euribor futures are down 1.5-3.0 ticks in the greens/blues.