The 10Y Bund contract slid lower in.....>

EGB SUMMARY: The 10Y Bund contract slid lower in morning European trade after

strong UK retail sales data and also near the close of the Spanish auction. The

10Y Bund is  at 0.327%, +1.3bp wider on the day.

- The German curve itself has been underperforming other EGB market led by the

Obl S-176, the 5Y bmk and CTD into the Bobl contract, suggesting that fast money

is behind the move.

- The spread between the 10Y Spanish and German bonds compressed to 115.2bp

following the Spanish bond auction. The weak auction metrics were overwhelmed by

an allocation right at the bottom of the E3-4bln range, necessitating a race to

cover positions.

- The AFT released its funding targets for 2018: the number is E195.0bln in 2018

and compares to the 2017 total of E213.1bln.

- EFSF scheduled Q1 funding target was announced at E14.5bln. The equivalent ESM

target Q1 is E3bln.

- French 10Y OATi breakevens fell from intraday highs of 1.45% to day's lows of

1.43%, with movements closely tracking oil prices.