German Bund future hit session low......>

EGB SUMMARY: German Bund future hit session low just after 0830BST and has been

slowly crawling its way back ever since to last trade 20 ticks lower at 159.14,

aided by reversal of risk-on sentiment as European equities lose their appeal

and soft US empire manufacturing data.

- This leaves German yields modestly lower on the day with the yield curve

slightly steeper with 2s/10s 0.7bp wider with 10-yr yield 1.2bp higher at

0.524%, well off intra-day high of 0.551%.

- There are large redemption payments from Germany, Netherlands and Italy

scheduled this week totalling nearly E40bln and appear to have limited the

downside movement in EGB bonds for now.

- EMU periphery have given back some there gains seen this morning, but remain

marginally tighter versus Germany with Spain and Italy 10-yr yield spread around

0.7bp tighter.

- Data is thin this week, but ECB policy makers are due to speak in mid-week at

IMF/World Bank meeting in US.