Events surrounding North Korea are......>

EGB SUMMARY: Events surrounding North Korea are the clear focus of attention on

Wednesday, which is sending the yen higher, gold upwards and pushing Bunds up at

the start of trading.

- Some of that initial spike in the Bund contract faded and the net movement in

the 10-Year Bund yield is a modest 1.3bp lower at 0.461%.

- The sudden appreciation in the HK$ is also a focal point and is potentially an

additional reason why the Bund contract is higher. To a large extent, the HK$

move is domestic in making and so the potential for spillovers elsewhere limited

but, the EGB market is nervous and thin.

- Core European markets are strongest today but spread widening to Germany is

tiny as investors are reluctant to dump carry trades en masse.

- There has been a very large buyer of front month euribor contracts this

morning. 

- European equity markets are very much on the back-foot in the risk-off

environment and the eurostoxx is down 0.7% today.

- Germany sells E4bln of their 5Y Obl later.