LONDON, Sept 24 Euro zone government bonds were
stable on Tuesday, with investors looking to German business
sentiment data for insight into the euro zone's economic
Comments from central bank officials on balance gave
European bonds support on Monday. European Central Bank
President Mario Draghi flagged the possibility of another round
of cheap loans to banks even as latest business surveys gave a
more upbeat picture than expected on growth.
Investors had expected the Federal Reserve's decision last
week to keep its bond-buying program intact to have taken some
of the pressure for more accommodative rate policy off the ECB.
"The Ifo will be the most important item today. We see risks
for a weaker-than-expected outcome as we are already at very
high levels for the Ifo," said Mathias Van der Jeugt, rate
"Yesterday we saw a dovish Draghi, who mentioned for the
first time also the potential use of another LTRO... we also had
rather dovish talk from Fed governors."
German Bund futures were 2 ticks higher at 138.80
but were stuck in a tight 19-tick range. Ten-year German yields
were flat at 1.86 percent.
Ten-year Italian bond yields were little
changed at 4.26 percent and the Spanish equivalent
was were steady at 4.28 percent.
Draghi said on Monday the ECB is ready to offer banks more
long-term loans to keep money-market interest rates from rising
to levels which could push inflation too low.
One influential Fed policymaker said on Monday it must for
now continue to push hard against threats to the U.S. recovery,
but should still be able to reduce its support for the economy
later this year.
"Central bank talk was supportive yesterday, I suppose there
is plenty more of central bank talk today so we will see if they
continue in the same theme," one trader said.
Fed Bank of Cleveland President Sandra Pianalto and Fed Bank
of Kansas City President Esther George are among central bank
officials due to speak this session.