A very limited overnight session; Schatz......>

BUNDS: A very limited overnight session; Schatz -0.5, Bobls -2.0, Bunds -1.

- 10-Year Bund yields virtually touched the ECB's depo rate on Weds, resulting

in a fresh all-time low of -0.399%, before ticking back. The space has been

underpinned by the prospect of additional ECB easing, kept alive by Lagarde's

nomination as the next ECB Pres (deemed dovish by many), worries over the health

of the global econ & the increased prospect of a U.S./EU trade war. The

prospects of looser MonPol & the resolution of the Italian fiscal situation (in

the short term) has also fuelled the bid for peripherals, with the 10-Year

BTP/Bund spread back < 200bp at yesterday's close.

- ECB's Villeroy spoke on Wednesday, noting that the Bank must be able to use

-ve rates for as long as is needed, and that there must be no doubt re: the

Bank's ability & determination to act.

- EZ retail sales headline the local docket today, with ECB's Lane & de Guindos

set to speak. Lane's importance is seemingly ever growing, with many suggesting

that he will become even more integral to the MonPol setting process if Lagarde

does become ECB chief, given her lack of outright monetary policy experience.