An eventful morning with a North........>

EGB SUMMARY: An eventful morning with a North Korean missile, a terror incident

on the London Underground (thankfully no fatalities) and a couple of central

bank speeches that moved the needle. 

- Markets appeared immune to the Korean missile. However, Bunds spiked on the

news of an explosion on a London underground but the biggest move was the

reaction to a speech by the Bank of England dove, Vlieghe who endorsed a near

term rate hike and later was quoted as saying that a tightening of monetary

policy might need to rise more than once if the economy develops as expected. 

- Gilt yields are 7-10bp higher today, having witnessed wild swings.The ECB's

own Lautenschlaeger from the Bundesbank also put in a hawkish speech soon after

Vlieghe and the Bund was punished further, even if a hawkish speech by

Lautenschlaeger is not so unusual. 

- Weak US retail sales provided short-term relief for EGBs before the selling

set in again. Bunds went into the close at the lows of the day with the 5Y

leading with a rise of 4.1bp. The 10Y was +3.1bp at 0.444%. The short end of

Italy was strong as large redemption payments were reinvested.