Core European debt is starting the......>

EGB SUMMARY: Core European debt is starting the week on a downward trajectory

today as the market responds with a delay to an interview given to Caixin on Dec

30 by Benoit Coeure in which he says that there is a "reasonable chance" that

the bond buys will not be extended. Currently, there is a 2.9bp rise in the 10Y

Bund yield to 0.455%, the highest since Oct 25.

- Market contacts also mention fears of syndicated issuance as another reason

for the weakness and Ireland is the only 10Y underperforming Germany today.

Ireland tends to issue new debt in the first week of the New Year although the

start of Mifid II tomorrow is seen as a potential spanner in the works for early

syndicated deals.

- Allong the yield curve, weakness is most intense in the 30Y section of core

curves (Bund 30Y is +4.6bp) although even the Schatz is under pressure with a

2.3bp yield increase.

- Manufacturing PMI data are dripping out this morning. Irish numbers showed

improvement, Dutch close to unchanged and the Markit PMI for Spain disappointed

with a small dip to 55.8 from 56.1. More PMIs are due later.