Bunds rose around 20 cents in the.......>

EGB SUMMARY: Bunds rose around 20 cents in the first couple of hours of trade

but then ran into a period of dull, sideways movement awaiting for the entry of

the US traders.

- News was in short supply and futures volumes were pitifully low, well below

the already poor 10 day average. This was despite roll activity gradually

picking up steam.

- As the US entered, the BTP market had the rug pulled from beneath it and the

10-Year Bund spread quickly widened from 160bp to 164bp. There have been some

quite concerning chatter by Right Wing parties about new currencies and weekend

comments of a new lira by Berlusconi was cited as a reason for the Italian

market's weakness. 

- Over the course of the day, the German curve bull flattened. We noted some

swap curve flattener trades in the morning session and good activity in 10Y

swaps that appears to be on the receiver side in the afternoon. 

- The 10Y Bund yield is 0.396%, getting close to the 200 day moving average at

0.355%.