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A fairly stereotypical risk-off trade...>

EGB SUMMARY
EGB SUMMARY: A fairly stereotypical risk-off trade today as equities and
commodities continued their declines. Global core bond markets have benefited
with the Bund yield down 4bp to 0.358% and the UST 10Y dropping 4.1bp.
- Bond curves are also flattening aggressively and the 2-10Y UST spread has
broken to decade lows and sparking curve stop losses, which have aided further
UST curve flattening.
- The rallying Bund contract clearly muddied the 10Y Bund auction set up, which
ultimately saw bids fall short of the E3bln available for sale. However, this
bad auction result was brushed aside - seen as a function of the market dynamic.
- Peripheral yield spreads to Germany are wider: Italy +1.6bp, Spain +2.3bp and
Portugal +5bp. The European iTraxx X-over is 7.4bp wider at 255bp. 
- The German 2-10Y spread is sitting at 107.3bp, equal to the curve spread lows
seen in September. 
- Later today, bond markets could well react strongly to US CPI data. 

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