The US Treasury market traded in a......>

EGB SUMMARY: The US Treasury market traded in a tight range all the way through

the early Asian time zone until the EGB market opened. At which point the 10Y

yield jumped by 1.25bp and the Bund contract also fell soon after the open.

- Italy was not downgraded by either Moody's or Fitch on Friday but the report

by Fitch read negatively, talking of expected fiscal slippage.

- Peripheral spreads to Germany are fairly stable thus far, although Italian

debt is making a marginal outperformance of Germany today.

- US and core European yield curve are steepening slightly today, unwinding some

of the strong flattening of the past weeks. The German Schatz yield is down

0.6bp to -0.597%, the 10Y is +0.9bp at 0.58%.

- Belgium sells E3.0-3.6bln of debt at 1000GMT. The Belgian curve is fairly

cheap to France at present.

- There is a limited European data calendar today and the US calendar is

non-existent until the FOMC meeting on Wednesday. Germany sells 2Y and 10Y paper

on Tues and Wed respectively.