LONDON, April 30 German Bund futures held steady
at the open on Monday with Spanish government bonds expected to
stay under pressure before an auction on Thursday which will
test investor demand for the country's debt after last week's
surprise credit rating cut.
Spanish 10-year yields will likely retest 6 percent, a
closely watched level it broke above several times last week,
with gross domestic data later in the day expected to confirm a
Following on the heels of Standard & Poor's two-notch
downgrade last week, this makes for a challenging backdrop for
the country's sale of 3- and 5-year bonds on Thursday, with
market liquidity potentially subdued by European holidays.
"We have a strong case for Spain to continue to underperform
Italy with Spain under pressure on ratings jitters, upcoming
supply, while Italian supply is out of the way," said Commerbank
strategist Rainer Gunterman.
"Today we have Spanish GDP which is forecast to show a
deepening recession so more trouble for Spain. Bunds will be
supported, possibly edging closer to the record highs we have
The June Bund future was three ticks up at 140.73
compared with 140.70 at Friday's settlement. German 10-year
yields were little changed at 1.71 percent.