Markus Koch at Commerzbank writes "While......>

BUNDS: Markus Koch at Commerzbank writes "While jitters about the formation of a

new government in Germany persist, a bout of robust tier-1 macro data out of the

euro area will hit Bunds next week.".

- Koch recommends shifting money away from Europe to the US and sees "a good

risk-reward in unhedged switches in shorter-dated maturities where spreads are

the widest on the curve."

- Commerzbank notes "A solid duration extension in the EUR Sovereign iBoxx index

by 0.07 - in line with the 12m average but slightly above the long-term historic

seasonal patterns - at the end of next week does not alter the tactical

prospects".

- Regarding the German political situation "the way ahead could result in the

resurrection of the "GroKo" (Grand Coalition, in German political parlance) -

either as a formal alliance or as a minority government tolerated by the SPD."