The Bund market went through some.......>

EGB SUMMARY: The Bund market went through some wild swings on Tuesday and caused

mostly by thin liquidity as many European centres were shut for Ascension Day.

- Once again, we were told that cash trading has been minimal. Sources spoke of

BTP selling last week and we heard of some cash Bund selling yesterday but

today's activity was thin and two-way on Tuesday. 

- Futures activity heated up in the Bund contract roll and this contributed to

some of the activity but there was no shortage of influence upon Bunds. 

- German GDP data came in slightly light of expectations at 0.6%Q/Q but a small

upward revision to Q1 GDP nullified the miss. Then, strong US retail sales and

other data prompted a decent move low in the early European afternoon.

Importantly, the weakness in the Bund contract stopped at around the Aug 4 low

and rebounded. As the market approached the close of the day, the rebound

gathered strength on the back of buying. Several decent sized invoice spread

trades were also noted late in the session.

- One interesting trade was a buyer of the Z7-M8 euribor spread at 4.5 cents.

The spread is at lows and a cheap'ish bet on a more hawkish ECB.