The the front end of the German curve...>

EGB SUMMARY: The the front end of the German curve saw underperformance while

the long end of the curve was somewhat mixed. The Mar-18 10Y Bund contract

opened marginally lower at 162.36 and traded choppy as the European morning

progressed. The German curve has slightly flattened on the day. Traders note

that markets remain thin as the holiday season approaches so price movements may

remain exaggerated.

-  The US Senate has approved the bill on Wednesday morning on 51-48 vote, but

the bill was sent back to the House, which had originally passed it on Tuesday

for a revote due to a procedural error.

- The main political risk to the EGB markets this week are the Catalan

elections, which are scheduled for Thursday. According to polls as they stand at

the moment it remains too close to call. 

- Peripheral EGB markets in particular Spain and Italy are doing well with the

Spanish curve flattening somewhat. The Bund-BTP spread is 1.6bp tighter at

151.6bp and the Bund-Bonos spread 1.2bp narrower at 109.5bp.

- German PPI data today came out at 0.1% m/m and 2.5% y/y.