LONDON Jan 30 German Bund futures opened lower
on Wednesday as investors made room for a sale of long-dated
German paper and braced for solid demand at an Italian debt
Italy will offer up to 6.5 billion euros of bonds maturing
in 2017 and 2022. Traders expect the sale to benefit from
yield-hungry investors but flagged the risk of indigestion after
a bout of buying in recent months that triggered a sharp rally.
"(The auction) probably (goes) alright but I don't think it
trades well afterwards," one trader said.
German Bund futures were 16 ticks lower on the day
at 141.66, as U.S. Treasuries also came under pressure
The market cheapening and rise in yields is likely to
benefit a sale of 30-year German paper, which is also expected
to benefit from bids from institutional investors who need to
match long-term pension and insurance liabilities to secure
After the supply is out of the way, investor attention will
fall on the outcome of the Federal Reserve policy meeting which
comes after the European market close.
The Fed is expected to maintain asset buying at $85 billion
a month and retain the commitment to hold interest rates near
zero percent until the unemployment rate falls to 6.5 percent,
provided inflation does not threaten to breach 2.5 percent.