Dec 21 Reuters German borrowing costs were little changed, and spreads between the core and periphery tightened on Wednesday as investors anticipated little upside for yields in the short term after the repricing spurred by last weeks European Central Bank meeting.

While investors are concerned about more public spending in 2023 to fight the adverse impact of the energy crisis, the ECB pledged further rate hikes and said it would start reducing its bond holdings in March.

German shortdated yields were close to their highest in more than a decade, with the twoyear yield down 0.5 basis points bps to 2.50. On Tuesday, it hit 2.51, its highest level since October 2008. It was around 2.2 before the ECB met.

I think we are done, at least for now, after the yield rise which followed the ECB policy meeting last week, Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors, said.

Germanys 10year Bund yield , the blocs benchmark, was flat at 2.30.

ECB euro shortterm rate ESTR forwards price in the depo rate to peak at around 3.4 in summer 2023, from about 2.8 before last week39;s ECB meeting.

Bond prices should hover around the current levels from today to yearend, Maxia added.

The Bank of Japan BOJ shocked markets on Tuesday with a surprise tweak to its bond yield control that allows longterm interest rates to rise more, but analysts expect further spillover effects to be limited.

Japanese buyers are already overweight U.S. dollar cash and other…