The Bund contract opened up close to....>

EGB SUMMARY: The Bund contract opened up close to unchanged at 160.85 but it's

been downwards ever since. Selling quickly greeted the early minutes of trading

leading into the Markit PMI numbers this morning. 

- French PMI numbers were firm. The manufacturing data fell slightly but

services were robust so that the composite hit a 6.5Y high. more important was

that the import price index moved to an 80 month high and above the long term

average. Energy prices are up but the trade-weight euro is up around 9% since

this time last year.

- EGB curves are bear steepening, led by the 30Y Bund yield, which has risen 2bp

so far today. Core-periphery spread are static this morning although the 30Y

sector of Spain is well bid, possibly in anticipation of an exceptionally large

month-end index extension in the country next week.

- January Flash Eurozone Markit PMI is due at 0900GMT but thereafter, attention

will shift to the myriad of press interviews coming from Davos because economic

data is second tier.

- EFSF is selling 0.125% Oct 2023 bond and 1.45% Sep 2040 bonds today.