The Mar-18 Bund contract dropped 15.....>

EGB SUMMARY: The Mar-18 Bund contract dropped 15 ticks at the open but the

market has pulled back losses in a slow, but sure, fashion.

- Part of that move resulted from the release of German Oct industrial

production that fell 1.4%M/M in October and was well below the expectation for a

0.5%M/M rise. However, accompanying the release was a statement that the number

and timings of public holidays was behind the drop.

- Technically,  the Bund is still trying to break through 163.67 resistance

(there was another attempt on Wednesday before it retreated again). In this

respect, look to 163.10-163.00 for initial support of note and the protection

against a deeper 162.79-162.57 setback.

- The German SPD conference today is not expected to produce any surprises as

they should vote Schultz through again (there is nobody else to vote for) and

also vote for discussion talks for another Grand Coalition with Merkel's Party.

- There are French and Spanish auctions today although sizes are fairly small

for the French offering compared to the norm. A second reading of Eurozone Q3

GDP will be released at 1000GMT.