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

flattening.

- Despite all the talk about the Sunday's Catalonian referendum, the Bonos

market is showing no obvious impact.