For most of the morning, the Bund.......>

EGB SUMMARY: For most of the morning, the Bund contract was left alone to nurse

losses. We heard from several sources that cash bond activity was either 'quiet'

or 'dead'.

- Within this thin cash market period, some small selling in Spain was noted and

the BTP future also came under quite significant selling pressure. The BTP 4.75%

Sep-28 is the IKZ7 CTD and also the poorest performing Italian bond this

morning. 

- 10-Year Bund-BTP spread has widened about 2.5bp today and far outpaces the 1bp

widening in Spain, which might have been expected to widen more because of the

Catalan issue and the Spanish auctions. One market contact speculated that

perhaps the Bank of Spain might be active in PSPP buying.

- German cancelled a November Obl auction in its Q4 issuance programme because

of lower funding needs.

- French and Spanish auctions have gone through without a hitch but the close of

the French linker auctions coincided with a small dip in the Bund that took the

contract down to the low of the day. The 10Y yield is +3.7bp at 0.48%.