The Mar-18 Bund contract opened 4.......>

EGB SUMMARY: The Mar-18 Bund contract opened 4 ticks higher 163.31 with not much

movement in early European trading. 

- The Italian curve saw an early bid in the 10Y sector but this has faded as

pressure on the Spanish bond market has built ahead of Bonos supply in around an

hour.

- The Treasury market has performed poorly in early Europe and the 10Y Bund-Tsy

spread has widened by around 1.5bp in the first hour of European trade. The

spread is 206bp, around 4bp lower than late last week. 

- In terms of data the Dec flash Mfg PMI came in better than forecast at 59.3,

the services PMI coming in lower than expected at 59.4 and finally the composite

PMI in slightly above consensus at 60.0.

- Eonia has dropped back down to -0.345%, which is only around 1.5bp above its

resting level that existed prior to the spike at the end of November. We can

guess that the likely interbank lending between Greek banks has subsided and

borrowing from the ECB has resumed. Not that the ECB's marginal lending facility

jumped to E633mln yesterday from E188mln.