For the most part, Friday effectively...>

EGB SUMMARY: For the most part, Friday effectively turned core European bond

investors into equity investors owing to the height of the correlations between

the two markets. The swinging around in equity sentiment initially sent core

EGBs higher and then when the US got going and equities rebounded, the Bund

contract dropped back down. 

- Credit spreads have started to widen in the past couple of weeks but until

Friday, the influence upon Bund-peripheral was minimal. Today, the widening was

also assisted by a mini meltdown in the Greek market in which the 10Y yield

jumped 27bp. Yesterday's 7Y GGB deal is painfully underwater. 

- The Bund-BTP spread widened 3bp to 126bp, which still remains quite low.

- Somewhat unexpectedly, Portugal announced that it would sell 4Y and 10Y debt

next Wednesday. 

- Flows included heavy Obl 2019 and off-the-run Bund 2020 selling in the early

morning. In EUR swaps there were mostly receivers early in the morning and also

later in the European afternoon.

- The 2Y Schatz is -0.7bp at -0.557% and 10Y Bund -0.7bp at 0.752%.