EGBs have mostly moved sideways.........>

EGB SUMMARY: EGBs have mostly moved sideways throughout the morning, with the

Eurozone PMI data providing little impetus. The only significant reaction in

Bunds to a PMI was to the stronger-than-expected UK manufacturing PMI numbers.

- ECB hawk, Nowotny said that he would not overdramatise or over interpret the

Euro's rise vs the dollar and that the ECB job regarding QE is how to initiate a

careful normalisation, not an abrupt end.

- Purely as a result of these comments. The Bund yield is now up 2bp but the

15-30Y BTP is suffering more still. The Bund-BTP spread tightening has

disappeared faster than an Alexis Sanchez transfer hope.

- We noted a decent sized swap steepener trade occurring in the wake of the

Nowotny comments.

- All EGB yield curves are bear steepening in response to his comments. He is a

known hawk and so what is happening is being helped by some stop losses.