The Bund contract opened 12 ticks.......>

EGB SUMMARY: The Bund contract opened 12 ticks lower at 163.05 and slowly

slipped lower since to only 163.02 in the first hour of trade. The initial

movements are surprising given the firing of North Korean ballistic missiles,

Brexit bills apparently being agreed and a host of US budget and shutdown news.

- However, the slow start ended a couple of minutes before Saxony printed CPI at

0.3%M/M. The contract broke through 163.00 and skidded lower as stops were

triggered. 31k contracts were traded in short measure as this level was broken.

- European equity markets have started strongly on hopes that a trade deal with

the UK can move forward and lessening the threat to many Eurozone exporters. A

trade deal with the UK should be negative for European bonds.

- Peripheral debt is outperforming, as can often happen when the Bund contract

moves rapidly lower. Italy has a small 10Y BTP and CCTeu auction later this

morning but this market is outperforming Germany by 1.5bp. 

- This morning sees further German State CPIs and the Eurozone economic

confidence data at 1000GMT. German national CPI is due at 1300GMT. This

afternoon also sees the second reading of Q3 US GDP.