There was a flurry of buying in the.....>

EGB SUMMARY: There was a flurry of buying in the early European session as the

stars appeared to align for a healthy session. There were redemptions/coupons

and various month-end effects that should have prompted a good performance.

- Much anticipated Eurozone HICP data rose 1.3%Y/Y, slightly above expectations

although the core rate increased to 1.0%Y/Y that was in line with expectations.

- Halfway through the European morning session, Germany sold E4bln of a new 5Y

Obl. Never usually well bid, the auction was decent by the low standards of

German auctions.

- As the market close approached, the large month end duration extension began

to exert an influence and mainly on the 30Y sector of the semi-core. The Dutch

month-end is 0.33Y and hence the bid. The German 10-30Y spread collapse 3bp on

the day and is at its lowest since November 2016. EGBs weakened post month-end

flows.

- The 10Y Bund-Greek spread widened by 6bp on the day perhaps a reaction to

upcoming syndicated supply. Other peripheral markets were mostly stable. 

- FOMC later tonight and French/Spanish auctions tomorrow.