There is little support for the Bund....>

EGB SUMMARY: There is little support for the Bund this morning as the market

creeps a day closer to the ECB meeting on Thursday.

- Overnight, the price action was quite range-bound. We heard of some 5Y buying

of Treasuries by central banks and bank buying in the 30Y sector but volumes

were thin. Currently, the 10Y Bund yield is 0.4bp higher at 0.297% and the

market is preparing for the small Schatz auction later today.

- Peripheral debt is strong with the spreads between Bunds and BTPs/Bonos/PGBs

all around 2bp tighter. There has been positive news for the Italian banking

sector with UniCredit raising its dividend and confirming that it is selling

NPLs to insurance giant Generali.

- The increasingly-watched EURUSD 3m cross currency basis swap is 0.8bp lower at

-58bp, indicative of expectations that dollar balance sheet will be in short

supply at the turn of the year and raises the chances that Europe also suffers

from a repo squeeze.

- Belgium is said to be considering a E3-5bln size Green bond in Q1 2018. 

- Today, attention will be on the 2Y Schatz auction, German ZEW and US PPI.