The 10-year Bund yields rose in early...>

EGB SUMMARY: The 10-year Bund yields rose in early trading as the threat level

in Spain appeared to drop back following a speech by Catalan leader Puidgemont

on Wednesday evening failed to mention secession (only the King's position).

- Bund-Bonos spreads quickly fell around 6bp through the course of the morning

helped also by a successful Spanish bond auction. 

- However, the Spanish bond market remains volatile and news that Catalan

separatists were hesitating on declaring independence sent German-Bonos spreads

lower again. Heading into the close, the spread was 10bp tighter and dragged the

other peripheral spreads tighter as well; Italy managed a 6bp tightening.

- The ECB minutes showed little fresh information but a complete read had a

slightly bearishly feel (for Bunds). It spoke of tighter labour markets, better

core inflation, non wage increases in labour costs etc.

- France successfully launched a new 10Y in its auction alongside 6Y and 30Y

paper. 

- Oil prices moved upward fairly aggressively in the European afternoon but

short-dated EGB breakevens were actually falling through the move.