German Bunds are trading modestly.......>

EGB SUMMARY: German Bunds are trading modestly higher but with little

conviction, having shrugged off earlier weakness following solid demand at

German 10-year re-opening auction, and Gilts bounce off session lows. German

10-yr yield is 0.1bp lower at 0.49%, while curve is little changed..

- Bunds opened little changed Wednesday with little direction seen from Asian

markets overnight and lack of Eurozone data also seen to change market

sentiment, with only the German 10-yr auction seen as the key event.

- In the end the auction went off without a hitch and cover came in at 1.5

times, supporting a mild bid in Bund futures.

- The long-end of EMU Periphery bonds have recovered from earlier pressure which

saw them trade around 2bp to 3bp higher as markets looked ahead to Spain and

French bond auctions tomorrow. Greece is the stand-out underperformer though

with Bund/Greek 10-yr spread 7bp wider despite lower yield and higher demand at

Greek 26-week T-bill auction.

- There was not much market reaction to Eurozone June PPI data that came in-line

with expectations at -0.1% m/m.