German government bonds are trading lower midday Tuesday following upbeat German ZEW business sentiment survey and strong Italian T-bill auction results, which fuelled risk-on sentiment. June Bunds opened lower on profit-taking following strong gains seen in the previous session and ahead of the key FOMC rate decision later today. Bunds then came under pressure after release of ZEW business sentiment survey, where the expectations index gained another 16.9 points to a 21-month high of +22.3 in March vs MNI median estimate of +12.0. However, Bunds then snapped back after current conditions came in weaker than expected and fell 2.7 points to +37.6 in March vs MNI median estimate of +40.4. Elsewhere, Italy 10-year spread tightened 6bps versus Bunds to +308bps after strong T-bill auction results, where a maximum combined E12.0bln of a new 3-month and a new 12-month BOT were sold at an average yield of 1.405% — lowest yield since Oct 2010 and covered 1.38 times. Belgium sold a combined total E3.256bln of a 3-/12-mth T-bill vs target E3.0-E3.5bln and Netherlands sold E2.825bln 2015 DSL
EasyForexNews Research Team