Bunds opened 87 cents higher at.........>

EGB SUMMARY: Bunds opened 87 cents higher at 158.96 but given that they had

already risen after the close and Treasuries were surging, the truth is that

even this was a little lower than might have been expected, given the slump in

global equities.

- However, within a couple of minutes, the contract traded down to 158.80 and

then began to descend in a more controlled manner. currently, the 10Y Bund yield

is down 3.6bp, an unremarkable change given the 1175 point drop in the Dow.

- What is interesting is the change in relationship between bonds and equities.

From around Jan 24 to Feb 2, the unwind of QE had been sending bonds (using TY

contract) and equities downwards together but at around 1615GMT yesterday, it

all U-turned.

- Bund-BTP, Bund-PGB and Bund-Bonos spreads are 2-3bp wider as the latter

markets are stable while German yields decline. Bund-GGB is 4.6bp wider.

- Austria sells 10Y and 15Y debt today via auction. Greece announced a 7Y

yesterday and Finland a 15Y but these are 'subject to market conditions' and so

could be postponed.