* 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 and Emelia Sithole-Matarise
LONDON, Oct 18 German Bunds rose on Friday on
the view that the stopgap U.S. debt deal may hurt the
longer-term growth prospects of the world's largest economy and
deter the Fed from running down its bond-buying until next year.
Other euro zone bonds were also broadly firmer on the view
that the region's lower-rated debt will benefit from the Federal
Reserve maintaining its current pace of stimulus.
The last-minute deal to extend the U.S. debt ceiling to Feb.
7 and fund the government until mid-January 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 37 ticks to settle at 140.05,
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 United States. The mood is
going to be bullish for Bunds in the near term," said Chiara
Manenti, fixed income strategist at Intesa SanPaolo.
The United States 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 the
pivotal payrolls data.
Many market players expect Bund prices to rise, whatever the
September jobs figures show.
"Even if the data comes out stronger than expected, the
market is going to take it with a grain of salt" because they
are from before the shutdown, said Gianluca Ziglio, head of
fixed income research at Sunrise Brokers.
"So you've got the bias by the market to take into account
weaker rather than stronger data and the market betting on the
Fed not tapering in December, taking everything into account
it's good to expect a bullish market over the next week."
He said he expected German 10-year yields to fall by 15-20
basis points more in the coming week.
Weaker euro debt markets should firm too.
"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 4 basis points
lower at 4.17 percent, while their Spanish counterparts
traded 5 bps down at 4.26 percent.