* Bunds rise as investors brace for weaker U.S. jobs data
* Euro zone bonds rebound after ECB-led sell-off
By Ana Nicolaci da Costa
LONDON, June 7 German Bund futures rose on
Friday as investors looking for insight into the Federal
Reserve's policy outlook positioned for a weaker-than-forecast
U.S. jobs data.
Euro zone bonds recovered from sharp losses made on Thursday
after comments by European Central Bank President Mario Draghi
fuelled concerns over the future of global monetary stimulus.
Market participants said the major risk was that the
non-farm payrolls data undershoots expectations, in a Reuters
survey, that 170,000 jobs were added last month. A private
sector employment report this week came in below forecast.
German Bund futures rose 43 ticks to 143.88. The
June contract expired on Thursday and has rolled over into the
Markets have become particularly sensitive to U.S. data in
recent weeks on concerns the Fed may soon begin scaling back its
bond purchases. The central bank has said it would need to see a
significant improvement in the labour market before "tapering"
its stimulus measures.
"I think we have got to see (payrolls) numbers above 200,000
on a consistent basis to start really unnerving markets"
regarding the possibility of Fed tapering, one trader said.
"A weak payrolls, I think, is a risk."
Euro zone bonds broadly recovered after falling in the
previous session when ECB's Draghi gave no hints that further
monetary easing was imminent.
"The market probably over-reacted yesterday because the
market interpreted Draghi's comments as less dovish than
expected but, in the end, they still left open the possibility
to act further if the data worsens," Alessandro Giansanti,
senior rates strategist at ING in Amsterdam, said.
After keeping its main interest rate at a record low of 0.5
percent, the ECB said it discussed the possibility of cutting
the rate at which banks deposit money with the central bank to
below zero but would keep this and other unconventional options
"on the shelf" for now.
Ten-year Spanish government bond yields fell 3
basis points to 4.63 percent after seeing their biggest daily
gain since February on Thursday.
Equivalent Italian yields eased 4.5 bps to
4.29, having posted its biggest daily rise since March on
Yields on higher rated French, Dutch and Austrian debt also
fell around 3 basis points.