German Bunds set to close Wednesday.....>

EGB SUMMARY: German Bunds set to close Wednesday at session highs having swung

in a relatively tight 28 tick range in light summer trade, weighed by US Tsy

refunding announcement, but supported by solid demand at German 10-yr auction

and dovish comments from Fed Bullard. 10-yr Bund yield last 0.8bp lower at

0.483%.

- 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. There was some volatility around

the US Tsy refunding announcement following views on Ultra-long bonds, but

dovish comments front Fed Bullard in MNI interview -- would not support further

rate hikes, underpinned bid in Bunds.

- The long-end of the Spanish curve has seen some selling ahead of Spain and

French bond auctions tomorrow with 10-yr Oblig 1.1bp higher. Greece has also

underperformed today with Bund/Greek 10-yr spread 7bp wider.