LONDON May 9 German Bund futures were flat on
Thursday before an auction of Spanish government bonds that is
expected to draw strong demand as investors seek to maximise
returns in an environment of low official rates.
Expectations that the European Central Bank will ease policy
further after it cut its key rate last week to 0.50 percent are
keeping Bunds close to record highs and lowering the premium
other euro zone bonds offer over the German benchmark.
Spain aims to issue between 3.5 billion and 4.5 billion
euros of 2016, 2018 and 2026 bonds.
"We've got Spanish supply to contend with but I expect it
will be fine in the current environment," one trader said. "As
much as the periphery rallies at the moment I don't think it
will weigh on Bunds. Bunds are cheap given the rate outlook."
Bund futures, a safe-haven asset that throughout
the financial crisis has usually weakened when appetite for
riskier assets picked up, were last 3 ticks lower at 145.82.