German government bonds are higher Tuesday having reversed opening weakness, with the benchmark 10-year Bund yield hitting fresh record low at 1.344% June Bund futures opened lower on profit-taking, but reversed direction as stocks pare gains with some traders citing comments from Bank of Spain saying economy is to continue shrinking in Q2. Bunds contined to squeeze higher after news wires reported sources from Spanish Treasury, saying will recapitalise Bankia through new debt issuance and would be unlikely to inject bonds directly into the lender. In addition, comments from ECB member Nowotny saying that the ECB currently isn’t in discussions about restarting the bond purchasing program also added the Bund bid. The yield on the 10-year Bund hit fresh record low at 1.344% on unsubstantiated market talk of large German bank looking at raising capital again, however, this has been since denied. In supply news, Italy sold its full target size of E8.5bln 6-month T-bill issue at an average yield of 2.104% vs previous auction 1.772% and covered 1.61 times vs 1.71.
EasyForexNews Research Team