Bunds dropped suddenly this morning,....>

EGB SUMMARY: Bunds dropped suddenly this morning, around 15 minutes prior to the

release of Saxony and Spanish CPI data. The sell-off was led by the longer end

of the yield curve and the 30Y yield jumped 1.1bp. Since the release the market

corrected its upward move

- Spanish HICP came in on the low side at 1.3%Y/Y%, down from 1.8%Y/Y but the

Saxon CPI printed 0.6%M/M, above the 0.5%M/M consensus for the German national

data.

- Aside from the various German State CPIs, the ECB releases Eurozone M3 at

0900GMT.

- Peripheral markets are pressured and responding to confirmation that Italy

heads to the polls on March 4. The Bund-BTP spread is 1.5bp wider at 153bp. 

- There is 0.03Y extension in the Bloomberg-Barclays index. The Gilt market

closes early today but the Bund-family on Eurex has normal trading hours.

- Currently, the 10Y Bund yield is nearly flat on the day at 0.421%.