EURO GOVT-Bunds dip; Italy eyed after growth downgrade
LONDON, Sept 21
LONDON, Sept 21 (Reuters) - German government bonds dipped on Friday, with riskier assets buoyed by hopes central bank stimulus measures will revive growth, but gloomy news from Italy and doubts over when Spain will seek aid underpinned the market.
Italian bond yields may rise after the government slashed growth forecasts, saying the recession this year will be far steeper than previously expected.
"There's a chance BTPs come under pressure, especially with a decent chunk of supply coming up net week," a trader said, although he added that if Spanish bonds rallied, the better tone in the periphery would help Italian paper.
December Bund futures were 45 ticks lower at 139.76, with traders anticipating a relatively quiet end to the week.
"The positioning seems to be pretty square now, with the obvious trades around the European Central Bank and Federal Reserve action done," the trader said. "There's a bit of head scratching now over what to do next."
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