German government bonds are opening mixed Wednesday, with the long-dated issues lower on profit-taking following strong gains the previous session and ahead of the key FOMC policy decision later today. Sep Bunds put in strong gains yesterday, with long dated issues outperforming on month-end duration buying and widening EMU peripheral spreads after senior German lawmaker reportedly said “cannot see ESM banking license becoming reality”. In addition, a Buba source on CNBC’s Steve Liesman saying “monetary policy should focus solely on price stability” and “states need fiscal intervention”. The comment dampens speculation of SMP reactivation. Traders reported further receiving interest related to Dutch newspaper Telegraaf saying that the country’s Minister for Work and Pensions, Henk Kamp, saying that he has gone back on his plans for an introduction of a new ‘ultimate forward rate’ (UFR), as the new discount rate for its liabilities, in order to boost coverage ratios. Focus today is on European PMI data, German 5-year Bobl auction, US ISM manufacturing, US quarterly financing announcements and FOMC.
EasyForexNews Research Team