With equities under pressure and........>

EGB SUMMARY: With equities under pressure and unfavourable Italian budget

headlines continuing to emerge, periphery EGB spreads are widening despite Bund

yields coming off their lows.

- The Dec 18 Bund future is up 50 ticks at 158.38, having traded in a range of

158.26-158.71 today.

- Italian BTP spread vs Bunds hit 2-session high of 310.4bps, last up 13.8bps at

309.2bps. More comments from Salvini not helping appetite for BTPs, which are

underperforming Spain (out 5.5bps vs Bunds at 111.6bps) in that department. 

- Indeed, Spain/Italy 10-Yr spread pushing higher to 197.6bps, slowly rising

towards Tuesday`s high of 210bps (which was highest since 2011). 

- Earlier Italy sold BTPs including new 3-Yr, which saw fairly low cover ratio

(1.26x) but sold full E3.5bln target. Strong sale of 20Y, 10Y solid. Yields of

course were elevated (3-yr sold at 2.51%), matching weakness in BTP curve.

- Euribor futures up from Reds to Blues, the latter up 4.0-4.5 ticks.

- Italy lower house holds debate and vote on fiscal outline at 1400GMT.

Otherwise fairly quiet on the speaker/data front.