Trading was choppy in the 10Y German....>

EGB SUMMARY: Trading was choppy in the 10Y German Bund this morning with an

initial decline in yield as the 10Y Bund market appeared to follow the 10Y Gilt

lower. Talk of a weak Chinese Caixin PMI release also sparked some interest.

- Yet, this rally evaporated soon after a speech by the ECB's Nowotny. Even

though the speech sounded mostly dovish, saying it was too early to discuss an

end date for QE he also spoke up the European economy.

- The main movement of the day is visible in the Italian market with BTPs

outperforming, mainly in the front end of the curve. However, the spread

tightening enticed someone to take some profits on Italy and around 1030GMT,

there was a block RX vs IK (selling BTPs).

- Irish debt markets remain largely unaffected by the announcement of the

Republican tax plan. The 10Y Irish bond is slightly outperforming today with the

yield down 1bp.

- The Bund-Treasury spread is also a large mover today as Treasuries weakened

early and the 10Y spread widened 2bpt to 199.5bp, although this has faded. The

Bund yield is currently 0.7bp lower at 0.365%.