It took a while for the impact of the...>

EGB SUMMARY: It took a while for the impact of the German election to filter

through into the Bund market but when it came it was big. There was little fresh

news in the morning session but it looked like the market had been short Bunds

and was caught out.

- All the major spikes in Bund trading volumes occurred at significant technical

levels: the Sep 18 high of 161.42, the hourly resistance of 161.51 and the Sep

15 high of 161.82. The latter level appeared to arrest the rally.

- An MNI interview with the ECB's Vasiliauskas said that he was not worried by

the current level of the euro and that the ECB is divided between a fixed term

or flexible taper but he prefers a fixed term.

- Asked whether scarcity of bonds in different national markets could cause

changes in the QE program, he said that fine-tuning was always possible but

there has been no discussion about changing fundamental parameters.

- Germany's IFO came out slightly below expectations but because it is already

at elevated levels, the miss caused little reaction in markets. Periphery bonds

opened weak but have recovered, helped by a large IKZ7 block purchase.