The Dec-17 10Y Bund saw a sharp drop....>

EGB SUMMARY: The Dec-17 10Y Bund saw a sharp drop around midday in the London

session on a block trade with a size of 5k. This pushed the 10Y Bund yield up to

an intra-day high of 0.389% helped by a stronger than expected October ADP

Nonfarm Employment Change. The 10Y Bund yield is 1.2bp higher at 0.375% having

given back some of the gains. The German yield curve is slightly steeper on the

day.

- There appeared to be a large E286k+ DV01 5Y-7Y-10Y swap fly, with paper

receiving the belly around midday. 

- Italian bonds were bid for the majority of the day, but have pared back gains

in the afternoon. The 2-6Y part of the Italian yield curve is flatter and the

7-10Y part is steeper. The 10Y Bund-BTP spread is tighter by 3.2bp at 143.1bp.

- Earlier during the day it was reported that the former Catalan President

Puigdemont would not be returning to Madrid to face charges on Thursday. The

Bund-Bonos spread widened by 0.8bp and is trading at 110.5bp. 

- Markets will be awaiting the FOMC interest rate decision at 1800GMT even

though expectations are that rates will be kept on hold.