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EGBs-GILTS: Focus Squarely On ECB


Large 2yr trade


Estoxx fades off initial resistance

Following a slow start to trading,......>

EGB SUMMARY: Following a slow start to trading, Bunds and EGBs jumped into life,
rallying hard through the first hour of trading. 
- One participant suggested that the path of least resistance was a core EGB
rally given month-end extensions, thin supply next week and the Catalan risk
hanging over the market. 
- Eurozone headline HICP data for Sept printed 10bp below expectations at
1.5%Y/Y, although the core measure was at consensus of 1.1%Y/Y.
- German unemployment data showed a new all-time low of 5.6%, making a small
surprise as the number of unemployed dropped 23k in September. This strong data
did little to hold back the bond rally.
- We hear that the EGB repo market is showing little of the usual quarter-end
squeeze lower in rates.
- The 10Y Bund yield is 2.2bp lower today at 0.457% and the yield curve is
- Despite all the talk about the Sunday's Catalonian referendum, the Bonos
market is showing no obvious impact.