Bunds have weakened to its lowest.......>

EGB SUMMARY: Bunds have weakened to its lowest since Aug 25 as the pressure of

low rates, recently heavy supply and impending US taper announcement combine.

- EGB curves are steepening with the 10-30Y section of the German curve +1.7bp

and the 2Y close to unchanged. Indeed, the front end of the curve is likely

looking forward, or evening trading with, very heavy coupon and redemption flows

coming tomorrow. 

- Peripheral debt is mostly performing better compared to Germany but spread

movements are small. 

- French final August CPI was released this morning but printed perfectly in

line with the flash reading. That said, short dated breakevens have continued

the rally that began in late August. Indeed the 2Y breakeven is at 1.08% today

compared to 0.8% less than three weeks ago, despite a stronger euro. 

- The SNB left interest unchanged today and said that it "would remain active in

the forex market as necessary". The SNB is one of the largest owners of EGBs.

- Focus is upon the BoE meeting later and US inflation. Ireland also sells E1lbn

of 10 and 20Y debt.