Bunds fell further to an intra-day......>

EGB SUMMARY: Bunds fell further to an intra-day low of 160.65 this morning

following the slide in the Gilt market. UK Gilts put in a startling and somewhat

surprising rally on Monday and today's price action was a push-back.

- Despite the initial catalyst being Gilt market selling, eurodollar option

activity was one-way bearish and sparse liquidity because of a German holiday

meant that the Bund contract hit air pockets on the way downwards.

- Despite the uncertainty over the Catalan referendum yields on the Spanish

10-year benchmark remain largely unchanged as the Catalan regional government

seems to be pushing for talks with the Spanish national government rather than

an outright declaration of independence.

- With the Irish 5Y syndication likely tomorrow, there was a subtle concession

build on the existing Mar-22 but little beyond this one issue.

- The ECB will release the monthly update to PSPP maturities and purchases at

1445BST today. Key will be the amount of German buying, since if this falls

short, the market will assume that the days of QE are numbered in fewer days.

- The Bund 10Y yield is +3.6bp at 0.487% and 2-10Y spread is 2.8bp steeper.