German Bunds have seen heavy selling....>

EGB SUMMARY: German Bunds have seen heavy selling from the start of the European

session, with a number of stops seen triggered in Bund future as it dropped from

161.68 to 160.78, along with a large 5s/10s steepener trade being executed early

on and significant downside plays in options as well.

- German 10-yr yield is +5.9bp at 0.467%, while 5-yr is +4.6bp at 0.26%.

- German bunds opened lower at the start of London session on the back of

slightly weak US treasuries in Asia, and there did not appear to be any catalyst

for the heaving selling that happened shortly afterwards. However traders

reported a number of stops being triggered in German 10-yr Bund contract (2 x 5k

RXZ7 sold at 161.17 & 161.01) following large 5s/10s steepener trade -- E1.16mln

a basis point. Also 2 large downside trades bought in Bund put options.

- One theory is that markets are looking ahead to US Trump's speech on tax

reform later, as EGB curves steepen and Euro sells off vs US Dollar

- European periphery are faring better with Spain and Italy 4.8bp and 3.5bp

tighter respectively.