Bunds recovered from a afternoon dip....>

EGB SUMMARY: Bunds recovered from a afternoon dip following announcement of an

Austrian 10-yr syndication deal, to close modestly higher with the yield curve

slightly flatter, however there was little seen/heard Wednesday to direct

markets. German 10-yr Bund yield is 0.9bp lower at 0.553%.

- Core/Semi-core EGBs got off to positive start supported by comments from ECB

members and then by unrevised Eurozone final CPI and solid demand at German

30-yr Bund re-opening auction.

- ECB Weidmann sounded less hawkish than usual saying it was appropriate to end

QE this year and that predictions of a mid-2019 rate hike were realistic. While

Vice-President Constancio this morning said ECB's forward guidance will not be

changed in the immediate future and that inflation was still not meeting

expectations. Finally ECB Nowotny weighed in on the debate on the strength of

the Euro, saying it was "not helpful".

- Peripheral bonds have been under pressure from the get-go but where as Italy

has pared its widening move during the day, Spain has gradually widened as

markets look ahead to Bonos supply. 10-yr Bund/Bonos spread is 2.5bp wider.