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The belly of the German curve is........>

EGB SUMMARY: The belly of the German curve is under some pressure this morning
despite a decent start to the session on the back of geo-politics.
- Soon after the European markets got underway, European bonds were hit by very
firm French, Germany and then Eurozone PMI data. Within the releases, there was
also a decent pick up in inflationary pressures. 
- Core yields came under pressure but there was a flurry of buying around
1100BST that was futures led. The market is looking at the German election at
the weekend and the attention is mostly upon whether the Liberals enter the
coalition or not but few expect large movements in the Bund contract as a direct
consequence of the vote.
- Peripheral debt markets are mixed as Portugal surrenders some of its weekly
outperformance but the 10Y Italian and Spanish spreads are close to 1bp tighter
to Germany today. 
- The 10Y German yield is flat on the day at 0.455% but the underperformance of
the 5Y has taken the 2-5-10Y German fly to its highest level for a month. 

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