Bunds came alive in London afternoon....>

EGB SUMMARY: Bunds came alive in London afternoon session and it wasn't due to

the dovish interpretation of BoE minutes, but from strong buying seen across the

US Treasury curve and then soft US data.

- 10-yr German Bund yield is set to close 2.8bp lower at 0.458%, while the 30-yr

has rallied even further and is 3.5bp lower. 2-yr though is 0.9bp higher.

- Bunds opened slightly weaker weighed by overnight comments from Fed's

Williams, in-line China Caixin service PMI, EGB long-end bond supply and BoE

policy announcement.

- Bunds pared losses despite better Italy service PMI and upward adjustment to

French service PMI as Spain 10-yr and 25-yr bond auction saw strong demand and

decent premium. While French 10-yr and 30-yr OAT also saw solid demand.

- There was only minor upward movement following BoE announcement, but then

Bunds took cue from large buying seen in US 5-yr, 10-yr and 30-yr Tsys futures

and eventually hit session highs after weak ISM non-mfg data.

- German/Spain 10-yr spread looks set to close 2bp wider following a roller

coaster of a day with prices seen weighed on supply indigestion.