The Bunds have been trading modestly....>

EGB SUMMARY: The Bunds have been trading modestly higher this morning on fairly

light volumes in wake of slightly softer inflation data. Majority of German

regional flash CPI came in below MNI pan German median forecast of 1.7% Y/Y. The

10Y Bund yield is currently trading almost unchanged at 0.382%.

- Yesterday, thousands of pro-unity supporters marched through the streets of

Barcelona in support of a unified Spain. According to a Sigma Dos poll for El

Mundo showed that 43.4% would vote for unionist parties while only 42.5% would

vote for pro-independence parties. The Bund-Bonos spread has tightened 6.4bp

point on the day and is currently trading at 113.7bp. Other peripheral markets

have also followed the Spanish market with spreads tightening by 6.1bp between

the Bund-BTP and by 9.2bp between the Bund and 10Y Portuguese Bond.

- In terms of European economic data still to come later today there is the

German CPI Y/Y at 1300BST.

- Final Eurozone consumer confidence remained at -1, however, economic,

business, industrial and services confidence data all ticked higher.

- Italy sold max E8.5bln in 5Y and 10Y BTP and new 7Y CCTeu.