The risk-off mood from early............>

EGB SUMMARY: The risk-off mood from early yesterday morning has been gradually

fading over the past 18 hours and led to a weaker Bund opening.

- There is a gap on the Bund contract chart below the current market at 164.98

and the early price action has been threatening a closure of this gap. 

- Spanish CPI data printed in line with consensus but Saxony CPI was 0.1% and is

above the German National CPI consensus is for only a 0.1%. The Bund dipped by

around 5-7 ticks on the news. 

- European equity markets have strengthened by around 0.5% already this morning

as nothing fresh has emanated from the Korean peninsular.

- That same risk-on impetus is also taking the wind out of the sails of the

Euro's appreciation and allowing Italian debt to outperform the core despite the

fact Italy sells debt later this morning.

- On the supply front, Finland has opened books for a new syndicated 10Y deal at

MS-21bp. We would expect to see around E3-4bln in total size.

- Portugal is also undertaking an exchange auction, neutral in cash terms but

adding some duration to the market.