The German SPD member vote went as......>

EGB SUMMARY: The German SPD member vote went as expected allowing the CDU/CSU

and SPD to form a coalition government. However, traditional Italian parties

fared badly at the election and there is a quite significant risk-off trade in

motion on Monday morning.

- German debt is outperforming everything else with the 10Y yield down 5bp to

0.60%. By contrast, the BTP 10Y has leapt by 6.6bp to 2.04%. It is the carry

centric 5Y area of the BTP curve, which is the poorest performer, likely driven

wider by some hedge fund money being cut out of positions.

- The 10Y Bund Feb-28 asset swap spread is at ASW-44bp, a record low for this

benchmark.

- Later today, German sells the Bundei26 and Bundei30 for E0.5bln each. Linker

real yield carry turns negative in March.

- For the Italian elections, the League's leader, Salvini has arranged a press

conference for 1200GMT. He will be important in the coming days because in

almost all likely scenarios, the League will be in government.

- Most important this week: the ECB on Thursday and US payrolls on Friday.