LONDON, Dec 19 (Reuters) - German Bund futures fell on Wednesday, extending recent losses, as growing expectations that U.S. lawmakers will manage to avert a fiscal crisis favored riskier stocks at the expense of safe-haven debt.
U.S. stocks rallied on Tuesday and Asian equities advanced also in anticipation of more aggressive monetary stimulus from the Bank of Japan.
Hopes of an accord rose this week after U.S. President Barack Obama made a concession with his offer to limit tax increases to incomes exceeding $400,000 per household - a higher threshold than the $250,000 he had sought earlier.
German Bund futures were last 21 ticks lower at 144.20.
In the case of a deal, Bunds would “knee-jerk down but I don’t see why we are going to collapse on it. I don’t think that’s the only reason Bunds have been reasonably well-bid recently,” a trader said.
“The growth outlook in Europe looks awful and those forecasts are presumably based on the fiscal cliff getting sorted out.”
Investors will get the latest insight into the health of the region’s biggest economy from German business morale numbers due later in the day.
But the trader warned against reading too much into the price moves, with liquidity thinning out as the Christmas holidays and end of the year approach.
“Everyone is shut for the year. People have got their books how they want, there is very little going on,” he added.