European bond markets have been beset...>

EGB SUMMARY: European bond markets have been beset by a risk trade in the

morning. EGBs have risen almost as fast as equity markets have fallen.

- There is a possibility that the start of the month has set off a small

re-balancing but early in European trade, stocks sank rapidly and there may have

been a fat-finger involved in Fiat stock that set off a round of algo selling. 

European tech stocks are down by around 5%. The Bund 10Y is -4.2bp at 0.325%.

- However, there was no respite and ahead of the Senate tax vote hike, investors

are likely reluctant to add risk. 

- Eonia's spike has attracted attention again. The best explanation seems to be

speculation that a bank stopped borrowing from the ECB MLF at 0.25% and switched

to interbank. With low eonia volumes, the resulting influence on average rates

was large. It also opens the possibility that the spike does not fully reverse.

- Eurozone manufacturing data for November were largely a non-event printing

close to expectations and rising from 60.0 to 60.1.

- France announced that it would sell only 4-5bln of OATs next Thursday and this

has helped the long end of France to outperform Germany slightly.