The Bund contract open unchanged but....>

EGB SUMMARY: The Bund contract open unchanged but has only gone downwards since.

The justification is more positioning than data-driven. 

- The 5Y part of the curve has led the weakness this morning; there was some

early initial activity in the 5Y swap (paying). The cheapening of the 5Y on the

2-5-10Y fly is a typical trade for tighter monetary policy. 

- Some stop-losses were triggered as the Bund contract broke through Monday's

low and the 61.8% Fibo of 160.24-162.78 level at 161.21 held the Bund contract

for quite a while before being broken.

- There is little support out there today although, once again, the peripheral

markets are well bid. The Bund-BTP and Bund-Bonos spreads are 0.6bp and 2.3bp

tighter on the session. 

- Economic data consisted of the Markit PMI reports, which came in slightly

softer than expected for the Eurozone composite. There was no Eurozone supply.