Tuesday`s trading in EGBs has been......>

EGB SUMMARY: Tuesday`s trading in EGBs has been highlighted by a sharp fall in

periphery yields and spreads, with rising risk appetite pushing Bunds lower.

- German yields are higher across the curve, weighed down by both the risk-on

tone in global markets as well as supply: Germany the only EGB issuer this week,

with Schatz this morning and Bund tomorrow. 10-Yr yields up 2.1bps at 0.3233%.

- Italian BTP yields have dropped sharply, with 2-Yr yields down 9.3bps at

1.0644% and 10-Yrs down 6.1bps at 2.9534% in a major bull flattening move.

- Other periphery EGBs are also rallying, with Spanish 10-Yr yields 3.9bps lower

at 1.351%, Portuguese equivalents down 4.9bps at 1.745%. Respective spreads over

Bunds down 6.0bps and 6.9bps.

- French OATs are weaker but spreads coming in vs Bunds, with the 10-Yr yield

1.2bps higher at 0.6654%, narrowing the spread versus Germany by 0.9bps.

- Small bear steepening in Euribor futures, Blues down 1.5 ticks.

- No major data or speakers for the rest of Tuesday, or on Wednesday, with data

flow picking up again on Thursday with flash August PMI numbers for France,

Germany, and Eurozone.