As the US Senate passed the tax.........>

EGB SUMMARY: As the US Senate passed the tax reform bill, risk sentiment has

improved in financial markets generally. There have been no sudden drops from

the Hang Seng or elsewhere today and so EGBs have been on the defensive.

- The German curve is bear steepening and the 10Y yield has leapt 5.2bp since

the previous night's close.

- Futures market volumes have been high and stop-loss activity was evident in

some of the sudden lurches lower in the market.

- In Spain, local newspapers are picking up an agreement between Rajoy and PSOE

opposition leader, Sanchez that Catalan elections would be called in January.

Market participants interpret this move as a short-term band-aid that will

permit carry trades to be re-implemented in the periphery. As such, BTP buying

was strong this morning and led by solid 10Y purchases. BTP buying has been

creeping up the curve this week.

- Belgium announced that it would sell E2.3-2.8bln of 3 bonds on Monday.