LONDON Nov 15 German government bonds opened
higher on Thursday on fears of a protracted gridlock in
negotiations over the looming U.S. "fiscal cliff" which
threatens to tip the economy back into recession.
President Barack Obama said on Wednesday that Republicans
would have to agree to higher taxes for the wealthy as a first
step in talks to avoid $600 billion of tax increases and
spending from kicking in at the beginning of next year
German Bund futures were 21 ticks higher at 143.35.
"Greece and Spain rumble on in the background but the fiscal
cliff is the more interesting in terms of market impact and
that's going to run until the end of the year," a trader said.
"(Bunds) don't really seem to want to sell off and there's
no reason for them to do so but positioning is pretty flat."
France will sell up to 7.5 billion euros of conventional
bonds, as well as up to 1.5 billion euros of inflation linked
The recent pick-up in demand for lower-risk assets and the
small additional yield the paper offers versus equivalent German
issues means demand is expected to be good.
"The (sale) is likely to be very well received, given the
ongoing demand for French paper from real money investors," said
Credit Agricole rate strategist Peter Chatwell in a note.
"We expect yesterday's cheapening has set the market up to
absorb the paper well."