EGBs-GILTS: Intriguingly Strong Bund Volumes

Choppy trade so far in Europe, with the UK and German curves steepening and peripheries trading mixed (only Italy wider), with equities on the back foot despite no clear catalyst.

Have been seeing large Bund volumes (270k front traded so far) with both bids and offers finding their size, so prices remaining very much within ranges. Month-end not really seen as a factor, given limited extensions. For now, attributing most early dislocations in global markets to digestion of the new Fed framework and potential policy shift in Japan post-Abe.

In Data, French Aug flash inflation came in a little higher than expected. Italy/Eurozone sentiment indicators round out the week's data. Italy sells E8.25bln at auction.

BoE's Bailey gives the day's keynote at Jackson Hole.

.** Latest levels:

• Sep Bund futures (RX) down 19 ticks at 175.25 (L: 175.06 / H: 175.43)
• Dec Gilt futures (G) down 15 ticks at 134.54 (L: 134.32 / H: 134.56)
• Sep BTP futures (IK) down 24 ticks at 146.62 (L: 146.47 / H: 146.81)
• Sep OAT futures (OA) down 22 ticks at 167.29 (L: 167.17 / H: 167.44)
• Italy / German 10-Yr spread 0.6bps wider at 143.3bps