* Bunds rise as markets reassess U.S. growth outlook
* Some analysts see Fed further delaying stimulus reduction
* Peripheral bonds seen supported by any Fed tapering delay
By Marius Zaharia
LONDON, Oct 18 German Bunds rose on Friday on
the view that the stop-gap U.S. debt deal may hurt the
longer-term growth prospects of the world's largest economy,
delaying the Federal Reserve's plans to reduce its bond-buying
The last-minute deal to lift the U.S. debt ceiling and fund
the government until Jan. 15 have led to concerns that a new
round of political brinkmanship will start at the turn of the
year, weighing on consumer and business sentiment.
Bund futures rose half a point to 140.28, having
gained 75 ticks on Thursday. Ten-year cash German yields
fell 4 basis points to 1.83 percent, moving in
line with their U.S peers, which hit their lowest since August
at 2.54 percent.
"The market is preparing for data showing the effects of the
turmoil around the budget in the U.S. The mood is going to be
bullish for Bunds in the near term," said Chiara Manenti, fixed
income strategist at Intesa SanPaolo.
The U.S. will resume publishing economic data next week
after a hiatus caused by the government shutdown which lasted
more than two weeks. The releases will include key payrolls data
Many market players expect Bund prices to rise, whatever the
"If we get strong numbers the market will shrug them off
because they are from before the shutdown. If they're weak, it
means the labour market may have been losing momentum even
before October," said Jan von Gerich, chief analyst at Nordea.
"If anything, they will support (German and U.S.) bonds," he
said, adding he did not expect the Fed to "seriously consider to
taper until at least early next year."
Other euro zone bonds were broadly steady, but the potential
delay in the withdrawal of central bank stimulus boded well for
the region's lower rated debt, analysts said.
"Most people had expected the Fed to start tapering (bond
buying) in December but there's a big risk there would be a
further delay, especially if budget negotiations are not
finalised before the December meeting" of the Fed, said Jussi
Hilijanen, chief fixed income strategist at SEB.
"That will support both safe haven and risky assets."
Italian 10-year yields were flat at 4.21
percent, while their Spanish counterparts traded
at 4.31 percent.