German government bonds are trading lower into the New York session Thursday amid market talk of a high acceptance level of PSI in Greek debt swap deal. The last update on Greek language website (greekbanking.gr) suggests PSI take-up currently stands at between 77% and 79%, with some rumour that the take-up could be as high as 90%. The deadline for Greek bondholders to accept the PSI offer on Greek law bonds is today at 2000GMT and results are expected to be released on Friday at 0600GMT. Traders attributed sell-off in bonds to big stop loss buying in Mar S&P 500 E-mini futures at 1361 for 10k, which pushed European stocks higher, with big volume in euroStoxx-50 futures also seen. The move also coincided with sharp tightening in Italian yield spreads, with 10-year spread tightening to +292bps – level not seen since Aug 31, 2011. This in turn triggered stop loss selling in June Bunds — traders report 7k contracts sold on break below 138.35. Attention now turns to the ECB decision is due at 1245GMT with the usual press conference with the ECB President Draghi following at 1330GMT.
StockMarketNews Research Team