EGBs had made some decent gains.........>

EGB SUMMARY: EGBs had made some decent gains before talk that Kevin Warsh was

being considered for Fed Chair, at which point Bunds followed the Treasury

market lower. 

- During the morning, the path of least resistance was higher because month-end

extensions were ahead and the Catalan referendum risk prompted a few to cling to

Bunds in case there was a risk off move. Spanish debt underperformed on Friday

but not markedly so, with a 10Y spread to Germany 1bp wider but then so were

BTPs.

- European CPI data came in a touch lower than expected in the headline index;

core inflation was 1.1%Y/Y and was in line with economist's forecasts. German

labour market data were very strong, with the rate of unemployment dropping to

an all-time low.

- European month-end extensions were not particularly large and had very little

influence upon EGBs.

- Going into the close, the 10Y German yield was -0.4bp at 0.474% with good

flattening of the 10-30Y spread.