German government bonds opened higher Wednesday, with the yield on the 2-year Schatz hitting fresh EMU record low at 0.139% on risk-aversion buying following overnight falls in stocks and amid uncertainty ahead of Italy’s auctions. The Nikkei-225 came under pressure after Japanese industrial output fell at a faster-than-expected pace in November, as the global slowdown and the persistently strong yen threatened the sustainability of Japan’s export-led recovery. Production at the nation’s factories and mines fell a seasonally adjusted 2.6% in November from the previous month after gaining 2.2% in November, bringing the industrial output index down to 90.1, way below the pre-disaster level of 97.9 in February. Looking ahead today, focus is on Italy’s 6-month T-bill and 2-year zero coupon CTZ auctions. Bunds are seen underpinned by month-end duration extensions. Traders see the 5-year Note finding support at 1.00% and the 10-year Note saw some buying at 2.00% overnight. Volumes are seen thin, with many players extending their Christmas holidays.
EasyForexNews Research Team