It has been a good few days trading.....>

EGB SUMMARY: It has been a good few days trading in EGBs since last Friday

morning but this evaporated on Wednesday. The trigger was innocuous, but

weakness set in almost from the start of trading. Some slightly strong UK

employment data were next to help the sell-off and large block trades in the

Gilts, Treasuries and Bunds soon showed themselves. A sudden spike in the DAX

led by a real estate equity was also cited as a reason for Bund weakness.

- Mid-morning, the 30Y Bund auction went fairly well but even the good auction

results failed to turn the market around.

- There is some nervousness in the Spanish debt market as the deadline for the

Catalan regional government to clarify its position on the independence

referendum gets close. The Bund-Bonos spread is currently trading 3.1bp wider at

120.0bp.

- Cash buyers of BTPs were seen in the morning and selling in longer dated cash

Bunds. 

- The market must now digest a heavy auction schedule from France (nominals and

linkers), Spain and the UK tomorrow alongside the Catalan deadline.