German government bonds are opening higher Wednesday, taking cue from late flight-to-quality gains in USTs towards the Chicago close and reduced expectations of any positive outcome from the EU Leaders Summit later today. June Bunds have since pared some gains after traders note DJ story that PIMCO is cutting its German govt bond holdings, because “the market is overvalued”. Traders noted FTQ bid in USTs towards the Chicago close after mistranslated comments former Greek PM Papademos that contingency plans reportedly were being made for a Greek exit. However, this FTQ bid didn’t fade despite comments being clarified later. In addition, mkts have reduced expectations that the EU Leaders Summit scheduled today has now been “downgraded” to an informal dinner, and view is that it won’t result in anything meaningful. Indeed, EC President Van Rompuy Monday made it clear that the dinner would be “an open and informal exchange of views” about how to bolster jobs and growth in the EU, in order to better prepare for the June meeting. This leaves attention on the historic German zero coupon 2-yr Schatz sale.
EasyForexNews Research Team