The good start to the EGB market was....>

EGB SUMMARY: The good start to the EGB market was provided by a weak dollar

generally but particularly the yen cross. While the correlation to equities and

USTs has changed rapidly lately the JPY vs UST link is alive and well.

- However, the good start to the EGB trading session has gradually faded through

the morning. The 10Y bund yield is only 1.2bp lower at present although the OAT,

PGB and BTP markets are quite well bid in a trading environment driven by flows.

- Spanish bonds are failing to keep pace with other peripheral markets as the

threat of a 30Y SPGB syndicated deal hangs over the market.

- Eurozone Q4 GDP data hit consensus at 0.6%Q/Q. Eurozone IP beat consensus at

5.2%Y/Y.

- Germany sold E1.5bln of the off-the-run Bund Jul-44, smartly above the

secondary market level.

- Portugal sold E1.25bln of 4Y and 10Y debt in a decent auction.

- All debt markets eagerly await the crucial US Jan CPI release and to a lesser

extent the retail sales release.