The Bund market started firmly as the...>

EGB SUMMARY: The Bund market started firmly as the BoJ declined to alter

monetary policy and helped the EGB space to move higher in the face of strong

equity markets in Asia and early Europe. 

- The rally gathered scheme as the news of the Spanish 10Y order book began to

filter into the market. As Bund yields declined, the Bund-periphery spreads

tightened but by mid-morning, the moves faded. Indeed, the 3bp tightening in the

Bund-Bonos spread seen in the morning was almost wiped out even though the order

book for the Spanish deal hit a massive E45bln.

- Germany suffered from a dismal 2Y Schatz auction and that sector of the curve

was red-inked for the entirety of the day. The 2Y Schatz yield finished +1.1bp

to -0.594%, whereas the 10Y Bund was 1.2bp lower at 0.555%.

- Ultimately, Spain priced E10bln of its new 10Y and this opened a strong bid to

the longer end of the peripheral curves. In order of tightening to Germany

Greece was 6bp lower heading into the close. Spain 3.3bp lower to an 8 year low

of 79bp, Italian and Spanish spreads were 2.3bp lower.

- The only data was a strong ZEW print for January.