LONDON Dec 12 Bund futures edged lower on
Wednesday as expectations of more Federal Reserve stimulus and
the perception that U.S. lawmakers are showing more urgency in
reaching a budget deal favoured riskier assets.
A Reuters poll showed the Fed is expected to announce that
it will extend its asset purchase scheme and commit to buy $45
billion of U.S. debt per month. Safe-haven Bunds and U.S.
Treasuries are closely correlated.
"The Fed dominates the landscape. Markets will be
disappointed if (no more stimulus is announced), they are
waiting for somewhere between 40 and 50 billion of monthly
buyings," one trader said.
Bund futures were last 14 ticks lower on the day at
Monetary stimulus may not be able to sustain a fragile U.S.
economic recovery if lawmakers fail to reach a budget deal to
avert $600 billion of automatic fiscal tightening measures that
could kick in next year.
But President Barrack Obama and U.S. House of
Representatives Speaker John Boehner spoke by phone on Tuesday
to exchange new proposals, in what investors saw as a sign of
progress in efforts to avoid the fiscal cliff.
"It is a very fluid situation, but I think the pendulum has
swung to being a little bit more positive this week," the trader