EGBs were battered by random flows on...>

EGB SUMMARY: EGBs were battered by random flows on Thursday, with little in the

way of gritty news to influence events. 

- Early in the morning, the very front end of the German curve was hit very hard

by a seller of the 14 Dec 2018 Schatz, as an investor tried to get ahead of

index extension selling of the security as it falls out of the 1Y+ indices on

Friday. There was no balance sheet to buy the security and so the yield was

9.5bp higher at one point. 

- Later, selling arrived in the 30Y Bund but flows into the periphery allowed a

strong compression in Bund-peripheral spreads that appeared to reverse once the

Italian BTP/CCTeu auction occurred. Bidding was a little soft in the 5Y section

but there was not a weak auction.

- Italian Prime Minister, Gentiloni went to the Presidential Palace in what

looked like it might be the formal start of the election campaign.

- The belly of the Italian curve (in particular) continued to weaken into the

afternoon.

- Heading into the close, the 10Y Bund is +3bp at 0.415%.