LONDON, June 25 German Bund futures crept higher
on Monday, after three successive week of losses, as investors
braced for a European Union summit later this week that many say
could be disappointing.
German Chancellor Angela Merkel agreed on Friday with
leaders of France, Italy and Spain on a 130 billion euros ($156
billion) package to revive growth but resisted pressure for
common euro zone bonds or a more flexible use of Europe's rescue
One trader said that did not bode well for the EU summit
later in the week, which would be further complicated by the
absence of Greece's new prime minister and finance minister due
to illness. Greece's foreign minister and outgoing finance
minister will attend instead.
"I suppose you could argue it's a vague step in the right
direction, but it doesn't really address the problem. I don't
think Germany is going to cave in," the trader said. "There is a
danger of disappointment."
The German Bund future was up 11 ticks on the day
at 140.99, having fallen for three weeks in a row, partly on
optimism there would be a policy response to the crisis.
Spanish government bonds rallied for a fourth consecutive
day on Friday after the European Central Bank relaxed its
collateral rules, and investors will keep an eye on yields to
see whether the impact of ECB move was lasting.
The ECB is under increasing pressure to act to restore
confidence in the struggling euro zone, be it through further
monetary easing or purchases of peripheral bonds.