The bund contract opened 12 ticks.......>

EGB SUMMARY: The bund contract opened 12 ticks lower at 157.76, basically driven

by the continued improvement in equity markets. However, almost from the start

of play EGBs have been moving higher in price, such that the contract was last

at 157.95.

- The exact reason for the rally is hard to discern. Several sources have

mentioned the BoJ's Suga commenting that they are "watching the FX market with a

greater sense of concern" and other comments by Asakawa. Normally, the prospect

of a weaker yen would lead to a decline in bond, and particularly Treasury

prices, given that the yen is a weather vane for risk. Yet, many correlations

are broken and even inverted.

- Attention on the Euro is high as it reaches its highest level for 3 years.

- Spanish debt is bid today, with sources speaking of domestic buying in the

7-10Y section of the curve. The BTP market is also well bid and both 10Y yields

have tightened by around 1.5bp against the German 10Y.

- US markets are closed on Monday but there is no early close today. Many Asian

markets are closed or thin.