Bunds are having a topsy-turvy..........>

EGB SUMMARY: Bunds are having a topsy-turvy morning with the Mar-18 10Y contract

initially under pressure and dropping to intra-day lows of 161.52. However,

shortly after reaching the lows the market rallied back up and pared all of the

morning losses. The 10Y Bund yield is 0.8bp higher at 0.413%.

- Markets will be closely watching Spain as the Catalans go to the polls today

in a regional election. Analysts at Rabobank are of the opinion that "the

separatists are likely to win the elections, but might lose their absolute

majority." The uncertainty over the regional elections has left the Bund-Bonos

spread largely unaffected as it tightened by 1.5bp to 105.6bp on the day.

- In the rest of the peripheral markets Greece, Portugal and Italy spreads are

all tighter compared with the Bund. Greece narrowing the most by 4.9bp at

368.6bp.  

- Looking ahead in terms of data the first release of the afternoon is the US Q3

final GDP at 1330GMT. Also at 1330GMT are US Weekly Jobless Claims data and US

Philadelphia Fed Manufacturing Index. There is also Eurozone Consumer Confidence

Data for December that is due to be released at 1500GMT.