A weak dollar and Japanese GDP..........>

EGB SUMMARY: A weak dollar and Japanese GDP release provided a good opening for

the EGB market.

- Initially OAT, PGB and BTP markets outperformed in a trading environment

driven by flows. However, the Greek market was extremely weak, once again and

losses are totting up for the recently issued 7Y GGB. The 10Y yield rose 13bp on

Wednesday.

- In terms of data Eurozone Q4 GDP data hit the flash estimate at 0.6%Q/Q.

Eurozone IP beat consensus at 5.2%Y/Y. 

- Germany sold E1.5bln of the off-the-run Bund Jul-44, smartly above the

secondary market level. 

- Portugal sold E1.25bln of 4Y and 10Y debt in a decent auction.

- Once the morning cleared, it was the turn of US data to provide the surprise.

US CPI easily overcame the weak retail sales numbers. The Bund yield spike 5bp

on the data release but buyers arrived. EUR swap volumes were elevated and large

trades that we tracked we mostly either receivers of bullish curve or butterfly

trades. The 10Y Bund was last -0.4bp at 0.746%