Not surprisingly in light of............>

EGB SUMMARY: Not surprisingly in light of overnight news in Catalonia, Spanish

bonds started well and initially tightened the 10Y Bund-Bonos spread by 6bp.

Early action saw good demand in the carry/roll heavy area of 2022-2029 area of

the curve. However, there has been a push-back as the session gathered pace. 

- Bunds stepped lower 23 ticks at the open to reflect overnight price action

that responded to the absence of chaos in Catalonia. There was further

additional downside soon after the opening. Currently, the 10Y Bund yield is

1.8bp higher than last night's close. Other peripheral and even semi-core

markets are outperforming Germany.

- Technically, the lower Bund market volatility has narrowed the bollinger bands

and suggests that a breakout is likely soon.

- Note that there is a 5Y Obl auction later today alongside E5-7bln 7Y DSL and

this will be weighing on the core. Portugal completes the issuance platter.

- European data is already out of the way and was only final Spanish CPI that

saw a 0.1% revision lower in annual HICP to 1.8%Y/Y.