The reaction to the Senate tax plan.....>

EGB SUMMARY: The reaction to the Senate tax plan passage was strong but, in

fixed income at least, has been faded by investors. The 10Y Bund yield rose by

around 3bp from the start of European trading and initially drifted higher to

0.345% before buyers arrived and brought the yield down to 0.33%.

- There appears no let up in the strong performance of the periphery with Spain,

Italy, Portugal and Greece all tightening by fairly decent amounts. the Bund-BTP

spread bounced off the 1Y low spread of 137.5bp and is currently sitting at

138.5bp.

- Michel Barnier has apparently said that a Brexit breakthrough is likely today.

The Schatz and Bund contract both dipped slightly on the news. However, the

market has become somewhat numb to the ebb and flow of "deal is close, not

close, close again" type of headlines.

- Belgian debt started heavy following a good rally on Friday but the decline by

peripheral spreads is taking that markets' spreads to almost 10Y lows.