Bunds are modestly firm on Monday,......>

EGB SUMMARY: Bunds are modestly firm on Monday, responding mostly to the strong

performance by the Gilt market rather than anything domestic. the 10Y Bund yield

is 1.6bp lower at 0.291%, with most EGB curves flattening.

- The very long end of the EUR swap curve is performing particularly strongly,

dropping 2.1bp today and outperforming the cash market. There has been quite

considerable amounts of EUR swap activity going through the SDR. Judging by some

of the maturity dates of the swaps, some of the trades are unwinds.

- The only meaningful economic data release has already been seen. French

business sentiment for Nov remained stable at 106 in November, defying

expectations for a small rise to 107. Despite missing consensus, a level of 106.

Italian retail sales for October showed a 2.1%Y/Y decline. 

- Supply is small this week and empty next. A E13bln Schatz redeems on Friday.

- The 3m EURUSD cross currency basis has been volatile in the past week but and

has risen 1.5bp today, although it had moved more rapidly earlier in the

morning.

- 10Y Bund-BTP +1bp to 315.5bp, Bund-Bonos +1.7bp to 111.6bp.