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- Following the sharp upside surprise...>

EGB SUMMARY
EGB SUMMARY: - Following the sharp upside surprise in September German inflation
published today, bund yields have drifted higher throughout the session. The
benchmark 2-year bund trades at a yield of -0.507% up from -0.531% while the
10-year yield has pushed up to 0.509% from 0.477%.
- French OATs have similarly sold off and the curve has steepened since the
early morning as a result of the longer end underperforming. The 2s10s spread
has widened to 116.3bps from a low of 115.1bps.
- The early morning sell-off in Italian BTPs has reversed sharply, particularly
at the shorter end of the curve. The 2-year BTP trades at a yield of 0.795%
having hit a high of 0.957%. According to MNI sources, Lega could push the Italy
deficit up to 2.5% of GDP, with a decision expected at a crunch meeting at 4pm
local time.
- The shorter end of the Spanish curve has traded sideways for most of the day,
having initially sold off in the early morning. The longer end has rallied
following the morning sell off, with the curve flattening. 
- The Euribor futures strip has flattened with whites/reds down 0.5-1.0 ticks.

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