The German 10-year yield is heading.....>

EGB SUMMARY: The German 10-year yield is heading into the Tuesday European close

around 1.1bp higher on the day. Most of the damage was done in the early hours

of European trading. There was a fairly typical bear curve steepening, and the

2Y Schatz yield was unchanged.

- The initial move higher was spurred on by rising Gilt yields combined with a

thin market due to the Unification day in Germany.

- The 10-year Bund-Bonos spread is up +0.8bp, today with a small bargain-hunting

showing up in the early morning but, as is typical for these types of threats,

spread widening occurred as the US woke up and saw the usual sensationalist

website coverage.

- The ECB released it PSPP data where we saw German buying close to the capital

key with the average portfolio maturity of 6.8 years which was slightly lower

than 6.89 from August. The market reaction was muted.

- Datawise, there was very little and the German and Chinese markets were closed

leading to Bund volumes around 78% of the ten day average.