Thursday afternoon's sell off in the....>

EGB SUMMARY: Thursday afternoon's sell off in the Treasury market led the Bund

contract 43 ticks lower at the open. The 30Y Treasury yield breached the 3%

level and MBS convexity-related hedging is around, although clearly with a much

lighter touch that pre-QE days.

- Within Europe, some of the fantastic outperformance of the 30Y tenor is being

handed back this morning. the 10Y Bund yield is 1.1bp higher at 0.733% but the

highest since August, 2015 but the 30Y yield is 2.3bp higher today.

- One theme that hasn't changed is the outperformance of the periphery. 10Y

spreads to Germany are only 0.5-1.0bp tighter today but the stronger growth in

Europe is diminishing credit concerns and Greece may even sell 7Y debt next

week.

- Implied volatility is also rising rapidly again. This morning, Bund RXH8

implied hit 5%. For most of December and January, this has struggled to get

above 4%. 

- Italian CPI data is due at 1000GMT, at the same time as Eurozone PPI numbers.

However, it is the US employment report that everybody is waiting for.