Spanish debt started on the defensive...>

EGB SUMMARY: Spanish debt started on the defensive as news filtered through that

many some Catalan banks are moving their headquarters outside of Catalonia.

However, Bonos have clawed back their losses as the day has progressed and the

spread to Germany is only around 0.6bp wider today.

- The Bund contract hit a patch of heavy selling early in the session that took

the contract from around 161.21 to 160.80. There was no obvious catalyst in the

news flow but definitely a stop-loss wave added to the move as the contract

passed through 161.00. Action was futures driven and the CTD into the RXZ7 was

the worst performer on the curve over that period.

- the 10Y German yield is 2.4bp higher at 0.48% and the 2-10Y spread is 2bp

steeper at 117bp and the Spanish curve is steepening more rapidly.

- Eurozone economic data have generally been strong, headlined by a

consensus-busting 3.6%M/M jump in German factory orders. 

- The US employment report is key to the final hours of trading this week but

there are also some ratings agency updates after the US close. Moody's updates

Italy and DBRS tackles the Spanish rating.