There was a solid start to EGB..........>

EGB SUMMARY: There was a solid start to EGB trading in the first hour of trade

and the RXZ7 contract high was reached at 163.24. Early momentum was at the 10Y

and the 5-10-30Y German fly traded down to new lows.

- Thereafter, buying switched to the 3-5Y section of the German curve.

- Economic data was limited to the final reading of the PMI data and saw a very,

very slight upward revision for the Eurozone composite to 56.0 from 55.9.

- After the price flourish at the start of trading, the market settled down into

a slow grind sideways until ECB APP data were released. The new redemption data

show that the ECB hold E101.8bln of debt maturing in the coming year and around

E8.5bln pcm on average. German swap spreads were volatile leading into the data

release but the market was somewhat disappointed by the quantity of redemptions

and so Bunds underperformed swaps.

- This Bund weakness to swap also allowed peripheral debt to pull back some of

the losses they had made earlier in the session.

- The 10Y Bund yield headed into the close with a 2bp decline to 0.344%; the

Bund-BTP spread widened 1.0bp on the session to 143.9bp.