The Mar-18 10Y Bund contract made a.....>

EGB SUMMARY: The Mar-18 10Y Bund contract made a recovery in mid-morning

European trade and reached intra-day highs of 161.86. However, the push higher

was stymied as price dipped near yesterday's close. Traders note that volumes

are very low today. The 10Y Bund yield is trading almost unchanged.

- Tensions in Catalonia are brewing to new levels as pro-independence parties

win back control. There were reports that Spain's PM Mariano Rajoy is due to

speak at 1300GMT. The Spanish curve has steepened with the long end of the curve

underperforming the most. The 10Y Bund-Bonos spread is trading 4.7bp wider at

109.7bp.

- In other peripheral markets the majority of the Italian curve is doing poorly,

taking cue from the Spanish markets. Italian Manufacturing Confidence came in

110.5 slightly below consensus and the Consumer Confidence Index was at 116.6

which was above the consensus level. The Bund-BTP spread is 3.2bp wider trading

at 152.2bp.

- There appeared medium sized Eur swap flows going through with a EUR42.9k DV01

5Y-10Y swap steepener at 58.29bps and a EUR84.9k DV01 2Y-5Y-10Y swap fly.