It was a bumpy trading session and......>

EGB SUMMARY: It was a bumpy trading session and heading into the close the Bund

curve has made a parallel shift lower of around 0.8bp. 

- The small net change in Bund yields hid a couple of big swings: a market

risk-off move soon after the open and then a reversal just before lunchtime.

- The Catalonian deadline passed with no solution and it now looks as if Art.

155 will be triggered in the next couple of weeks unless fresh regional

elections are called. This news came 30 minutes before the Spanish auctions and

appeared to have very little influence. While Spanish bonds were moving around

all day, the 10Y spread to Germany widened by less than 1bp over the course of

the day.

- Far bigger moves were seen by Portugal (4.5bp tighter to Germany) and the was

a sudden surge of BTP 5Y cash buying in the afternoon caused all spreads to

Germany to tighten aggressively. The 10Y Bund-BTP ended 1.6bp lower at 163bp.

- Spot curve trades were fashionable in the EUR swap market: generally curve

flattening beyond 5Y and steepeners in the 2-5Y.