Good volatility early on has given......>

EGB SUMMARY: Good volatility early on has given way to a rather dull session.

The Bund contract opened firmly on the back of the breakdown in coalition talks

but these gains evaporated and the opening gap closed within an hour.

- After the initial fireworks, the EGB market settled and there have been very

few notable trades; certainly nothing in the futures or EUR swaps markets.

- German President, Steinmeier is to make a statement at 1330GMT, 1430CET. There

are conflicting reports across the market as to whether a German minority

government is do-able.

- Peripheral markets are fairly stable today with the exception of some small,

additional cheapening in the Greek market. The Bund-BTP 10Y spread is 0.7bp

tighter at 146.8bp.

- Slovakia successfully auctioned 8Y and 20Y paper, with the 20Y seeing a very

high cover. This sector of the curve has cheapened significantly to other EGB

20Y sectors.

- The only data release of note was September German PPI, which hit the

consensus estimate exactly.