BONDS: EGBs-GILTS CASH CLOSE: Further Bear Flattening

Bund yields hit a fresh cycle closing high Wednesday, with periphery/semi-core EGBs underperforming overall. * Near-term rate hike expectations rose throughout the session (another half-hike added to the ECB path with 4 hikes over the next 12 months) amid a steady flow of risk-negative Iran/MidEast headlines driving firmer energy prices (front Brent crude firmly above $100/bbl). * The impact was compounded by strong PMI readings in both the Eurozone and the US (UK Composite missed slightly) and a hawkish speech by Federal Reserve Governor Barr applying a little more front-end pressure through mid-afternoon London time. * While the EGB and UK curves bear flattened sharply, 10Y Bund yields notably saw a post-2009 high close. * BTPs and GGBs underperformed overall, while OAT spreads moved to a fresh post-2012 wide vs 10Y Bunds. * Thursday's schedule includes the SNB and Riksbank decisions, German IFO, and UK and French consumer confidence data as well as appearances by the ECB's Lane and Schnabel plus BOE's Dhingra, Lombardelli, and Breeden. Closing Yields / 10-Yr EGB Spreads To Germany * Germany: The 2-Yr yield is up 10.4bps at 3.33%, 5-Yr is up 11.8bps at 3.415%, 10-Yr is up 9.2bps