Bunds opened up strongly to follow......>

EGB SUMMARY: Bunds opened up strongly to follow the Treasury market rally in the

overnight session but then built quickly upon those gains as a Bund block

purchase came at an important resistance level of 162.29. Stop-losses then

propelled the contract to peak at 162.50. 

- The yield curve has flattened by 3bp between 2 and 10Y and the 10Y Bund yield

has fallen 3.6bp on Thursday to 0.527%.

- All of the movement in yield has been in the real yield space despite the fact

that the euro appreciated strongly versus the dollar following the releases of

the FOMC minutes. 

- Peripheral debt markets are largely keeping pace with developments in the

core. At one stage, the Bund-Bonos spread widened to above 100bp but is back

below at 98.7bp. Also, the BTP market has outperformed the core slightly.

- Economic data saw Eurozone M3 rise 5.0% Y/Y as expected and even the details

were largely unexciting. 

- Ahead of a heavy US earnings calendar, the European earnings calendar was

frenetic but has left stockmarkets mixed.