Rates Strategist, Markus Koch at Commerzbank...>

EGBS: Rates Strategist, Markus Koch at Commerzbank believes that in the upcoming

week, the FOMC meeting and US labour market report could impart a bearish tilt

to Treasuries. However, "What may shield Bunds from adopting Treasuries' bearish

tilt, short term, is the Troika of soft euro area flash CPI data, still

massively negative net supply in the EGB space and a decent iBoxx euro Sovereign

index extension at the end of October."

- Clearly there are alarming developments in Spain but Koch does not expect any

"adverse impact on major peripherals spreads as redemptions and coupon payments

remain sizeable, roughly equally split between Spain and Italy." Note that net

issuance will rebound to positive territory only in the week after next."