Bunds headed higher from................>

EGB SUMMARY: Bunds headed higher from mid-afternoon Tuesday as periphery EGBs

also saw some relief from earlier pressure.

- After hitting a July low early, Bunds recovered, with the Sep8 future rising

from a 161.82 low to 162.29, a rise of 18 ticks on the day. There was some bull

flattening as well, with 10-Yr yields down 1.4bps and 2-Yrs down just 0.6bps.

- Periphery yields narrowed from intra-day highs but spreads vs Bunds ended

wider. 10-Yr BTP spreads widened by 3.5bps to 226.7bps, down from the high of

230.6bps which had been the highest since July 12.

- Portuguese spreads saw an aggressive narrowing late as well, with the 10-Yr

spread falling from 139.6bps around 1400BST, to 137.7bps by 1600BST. 

- The Euribor strip saw little movement, with a few contracts in the

nearer-dated end of the strip off 0.5 ticks (Whites and Reds).

- Wednesday sees France and Spain PPI and German IFO data early, with a German

sale of new Oct-23 Bobl later in the morning.