The bund futures contract slipped as....>

EGB SUMMARY: The bund futures contract slipped as the FOMC statement was

released showing that the Fed had slightly upgraded the inflation outlook but

failed to fully participate in the Treasury market recovery soon afterwards.

This left Bunds nursing losses at the open and those losses have been built

upon.

- The significant reasons for buying the market yesterday have turned into

reasons to sell today. There is no sizeable month-end extension buying but

instead supply and mostly at the long end of the yield curve. MNI sees around

E14.25bln being sold between France and Spain.

- European Equity markets are mostly in the green this morning, although Shell

dropped 5% at the open after reporting results.

- Bund implied volatility has perked up substantially over the past couple of

days from around 4% at the back end of last week and has stuck close to 4.61%

this morning. Similar moves higher are being seen in TY implied vols too.

- Eurozone manufacturing PMIs are due this morning, starting with Spain and

Italy with final readings for France, Germany and the Eurozone later on.