EGBs are pulling back some of the.......>

EGB SUMMARY: EGBs are pulling back some of the losses seen on Wednesday, mainly

assisted by the weak Eurozone CPI print. Up until that moment, the Bund yield

was actually higher on the day. 

- The German curve is pivoting: 2Y yield is up marginally, the 30Y is -1.4bp.

- The all-important Eurozone core CPI stayed at 0.9%Y/Y in November, dashing

expectations of a tick higher to 1.0%Y/Y. Fred Ducrozet from Pictet Wealth

Management made the point that unrounded, core rose from 0.89% to 0.93% and the

details were encouraging for improvement ahead.

- The data set off a round of Bund block trades that propelled the contract from

around 162.40 up to the day's high at 162.75.

- Once again, Italian debt has outperformed and the Bund-BTP spread tightened

nearly 2bp to 139bp and close to the one year low of 137.5bp seen on 7 Nov. The

10Y spread to Spain is back under 30bp.

- There was a reported buyers of EGB linkers this morning and this is creating

an odd environment in which Gilt breakevens are dropping and EGB breakevens are

rising.