It was a crazy trading session. A.......>

EGB SUMMARY: It was a crazy trading session. A lazy, flat start to the session

gave way to an intense period of volatility. 

- The first leg lower in the Bund came courtesy of some fairly hawkish comments

by Austrian Central Bank Governor, Nowotny. His comments suggested an earlier

taper and BTPs and longer maturity paper suffered.

- The payroll report was a roller-coaster of emotion; a rally on a weak report

that was added to by some erroneous newswire reporting, which quickly U-turned

and soon Treasury yields were above pre-payroll levels. 

- A stronger-than-expected ISM manufacturing report again hit Treasuries hard as

American traders looked forward to an early close and a long Labor Day weekend.

Perhaps the weakness was over-sized for the beat of expectations but conditions

were thin. 

- Over the day, the Bund yield rose 3.6bp to 0.397%, with a significant 2.2bp

steepening in the 10-30Y spread. 

- Peripheral spreads were quite stable.