The German Bund contract opened a few ticks....>

EGBS: The German Bund contract opened a few ticks down at the open but recovered

that lost ground fairly rapidly, indeed the morning almost took the Mar-18

contract to the recent double peak of 163.66/67.

- The strong performance was mostly cash based and we heard of some 2-10Y

steepener trades. There was also a lot of activity in the 10-30Y sector of the

swap curve, mostly on the pay side. The result was a significant outperformance

of swaps by cash and futures markets. At one point, 10Y German swap spreads had

moved 2bp wider.

- Auctions from Spain went fairly well but a short period later, the French

auctions were weak, particularly for the OAT 2029 Green bond. EGB markets

weakened around supply but the bigger problem was a very weak 30Y Gilt auction

that prompted a round of stop-losses in EGB contracts. 

- Economic data have included a holiday-impacted German Oct industrial

production report, which showed a 1.4%M/M decline and compared to 0.9%M/M

expected rise. Eurozone second reading Q3 GDP registered a 0.6%Q/Q rise, in line

with the first reading.