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(X1) Bearish Theme Intact

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EGB SUMMARY
EGB SUMMARY: After trading fairly flat in early Europe the Mar-18 Bund contract
dropped sharply from 163.40 to 162.91. The reason behind the fall was initially
unclear, but it was later noted that there appeared to be a large swap trade
that went through, which would explain the large downward swing. It is also
worth pointing out that there is a technical congestion area around this level,
which could provide some support.
- The RXH8 contract is currently 30 ticks lower at 162.97.
- There were reports that Facebook would non longer be booking non-US revenues
from large advertisers through Dublin. If replicated by other major tech
companies it could reduce the amount of tax collected by the Irish government in
the future. The Bund-Irish spread is 1.1bp wider at 21.2bp.
- On the supply side the DMO sold Stg800mln of 0.125% March 2036 IL Gilt 0.125%
March 2036 IL Gilt with average real yield of -1.650% and bid-to-cover ratio of
2.34.
- The markets will be eyeing US inflation data due to be released at 1330GMT and
FOMC monetary policy decision at 1900GMT.