December 21, 2012 / 7:10 AM / in 5 years

EURO GOVT-Bunds advance on U.S. budget talks impasse

LONDON, Dec 21 - German Bund futures pushed higher at the open on Friday as lack of progress in U.S. budget talks raised the stakes that fiscal tightening will take effect next year and tip the economy into recession.

Bunds followed a rally in Treasuries after Republicans in the U.S. House of Representatives failed to muster enough support to pass a proposal to avert the series of tax hikes and spending cuts that is due to come into effect in about two weeks. President Barack Obama had vowed to veto the proposal.

“It (U.S. talks) doesn’t seem to be going particularly well so I can’t see why core markets should sell off at this point in time. But there’s not much activity with Europe only open for another two days of trading for the year,” a trader said.

The Bund future was last 29 ticks up at 144.61 compared with 144.32 at Thursday’s settlement.

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