There is a small bid to the longer......>

EGB SUMMARY: There is a small bid to the longer ends of core markets today but

the sub-10Y area is almost unchanged. To be precise, the 10Y Bund yield is lower

by around 0.5bp at 0.45%.

- Peripheral markets are performing strongly although early gains in Portugal,

which saw the Bund-PGB spread decline 5bp, have been surrendered. Instead,

investors are buying Bonos & BTPs. In Italy, senior bank credit spreads

tightened upon news that a bond tranche that sits between Junior and Senior

tranches could be introduced to buffer senior debt holder in the event of a

bailout. However, Spanish debt is outperforming BTPs today.

- The Swiss franc fell sharply this morning as investors speculated that large

Swiss insurance companies would need dollars to pay for hurricane damage. This

has knock-on effects upon SNB purchases of EGBs but the impact was insignificant

today.

- Within the semi-core Belgian debt is strongest after completing 94% of

issuance needs this year.

- The only decent data was from the ZEW, which came firmer than expected.