The morning trading session was an......>

EGB SUMMARY: The morning trading session was an extremely drawn out affair. The

market lacked any pulse. There was no important economic data and no supply.

There was a little more activity in the afternoon as US trading got underway. 

- Surprisingly, this was the moment when Bunds decided to rally, even though the

Treasury market was fairly stable in price terms, even if US futures market

rolls were in full swing.

- The 10-Year Bund yield has dropped below the 200 day moving average of 0.377%.

The curve movement was largely parallel in Germany. However, the long end of

semi-core curves have not had a strong bid for a while. For example, the

relative slopes of the French and German curve is pushing to new recent highs.

We noted that the 5-30Y box between these two credits is just 4bp below EMU

highs at 49bp.

- Peripheral markets were in a strange place on Thursday; BTP yields fell

further than in Germany but Spanish/Portuguese yields rose; the Bund-Bonos

spread increased 2.5bp to 122bp, its widest sine Jun 8 and  27bp higher than

just a month ago.