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Post-LIBOR Settle Update, 3M Highest Since August 2020

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EGB SUMMARY: Eurex has technical difficulties and opened late. When the markets
did open the Mar-18 Bund contract opened little changed and stayed flat early
on. However, the contract saw a sharp decline from 163.40 to 162.91 on flow
rather than news and stop-losses built.
- After briefly stabilising, the contract pared most of its earlier losses
reaching pull back highs of 163.33 on the back of weak US CPI data.
- The yield on the 10Y part of the German curve heads into the close of the day
+0.3bp at 0.317%. The yield curve pivoted with the Schatz yield lower and 10Y
higher; the 2-10Y spread rose 1bp to 105.4bp.
- The Italian election date has apparently been set for March 4 and talks of
dissolving the Chamber of Deputies and Senate around Dec 28th or 29th. This news
hurt BTPs all day, leading Bund-BTP 10Y 7.9bp wider at 147.3bp.
- Bund-EGB spreads were wider across the board. Ireland suffered from news that
Facebook was no longer booking non-US revenues through Ireland. French debt also
widened 2bp to Bunds, led by long end weakness.
- In Germany, SPD and CDU/CSU continued talks but with no hard news.
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