German Bunds are trading mixed into.....>

EGB SUMMARY: German Bunds are trading mixed into Monday`s close yield curve

flatter as long-end seen supported by lower than expected pan German flash CPI

data.

- There was a delayed reaction to pan German flash HICP coming in at 1.5% Y/Y vs

expectation of 1.7% Y/Y helped by two large future block flows that saw a sharp

spike in the Bund future of 22 ticks. The Dec-17 contract is currently trading

just shy of the fresh intra-day highs of 162.69 and 10Y yield is 1.4bp lower at

0.369%.

- The EGB markets today were dominated by the rise in the peripheral bonds

particularly that of Spain, Italy and Portugal. Reports that the Central Spanish

government in Madrid had taken direct control of the Catalan regional government

and then that the former Catalonian President Puigdemont had fled to Brussels.

While Italy was upgraded by S&P.

- There are also large cash inflows from Spain and Italy adding up to E44.3bln

possibly bidding up the peripheral bonds. The Bund-Bonos and Bund-BTP spreads

are currently trading 7.6bp and 9.4 tighter respectively.