Bunds fall as investors expect ECB to hold fire this week
LONDON Dec 2 (Reuters) - German Bunds fell on Monday, with appetite for the euro zone's benchmark debt fading after above forecast inflation data last week cemented expectations that the ECB will hold fire at a policy meeting this week.
Euro zone consumer prices rose 0.9 percent in November, above the 0.8 percent forecast and up from 0.7 percent in October, but still below the bank's target of close to 2 percent.
A sharp fall in inflation in October prompted the European Central Bank to cut its refinancing rate to a record low 0.25 percent. With ECB rates close to zero, further easing would only occur if inflation kept falling, analysts said.
Bund futures fell 38 ticks to 141.43, while German 10-year yields rose 3.3 basis points to 1.73 percent, having traded in a 1.65-1.80 percent range last month.
"We don't have any real buyers at the moment as...we are not far from the bottom (of the range)," BNP Paribas rate strategist Patrick Jacq said.
"(Given) the inflation data last week, we should not see the ECB ... (expressing) more concern about disinflation."
The ECB will also release its updated inflation and growth forecasts, which investors will scour for hints on any moves next year.
Traders say that while the market is not positioned for any move from the ECB this week, expectations that President Mario Draghi would emphasise that he was ready to do more to spur inflation and stimulate the economy if needed were widespread.
"They'll have to keep the door open to further action ... and with inflation significantly below target they'll have to do something next year," one trader said.
The ECB's meeting will be followed by the release of U.S. jobs data on Friday. A strong reading might raise expectations that the Federal Reserve could start trimming its bond-buying stimulus programme later this month, which would weigh on Bunds.
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