Basically, EGB bond prices went down....>

EGB SUMMARY: Basically, EGB bond prices went down in the morning and up in the

afternoon and heading into the close the 10Y Bund yield was +0.5bp relative to

the close on Wednesday. 

- The morning's trade was dominated by the supply from Spain, nominal and linker

supply from France and 40Y Gilt supply. The EGB auctions saw decent bidding but

extreme market volatility preceded the Gilt operation and ultimately, a large

0.7bp tail was seen. This sent Gilts and everything else lower.

- Equity markets were firm throughout the day but played only a passing role in

EGB or even UST price action. 

- Another factor adding to debt market weakness is the steepening of the yield

curve that has created some stop-losses on curve positions. At one point, the

2-10Y Bund curve 2.2bp wider, reaching its widest spread since 2014 at 134.2bp.

- The other big mover was the Greek market, which tightened 20bp to 10Y Germany

in the morning and took everything back by the close.

- As the US opened up, the Bund direction reversed, aided by the absence of big

supply next week and block trades in the 30Y Ultra UST future.