German government bonds are opening lower Monday, taking cue from weaker US Treasuries overnight amid risk-on following upbeat Chinese data released over the weekend. China purchasing managers index produced by the China Federation of Logistics and Purchasing (CFLP) rose to 53.1 in March from 51.0 in Feb. This however was slightly offset by HSBC’s final PMI for March, which showed conditions in China’s manufacturing sector slumped to a four-month low in March. US Treasuries pressured lower early London session, with long-end under pressure, in turn steepening the yield curve. However, the 10-year Note yield so far holding 2.25% level. Overall, volumes were described as decent in both cash and futures, despite China holiday until Thursday. Focus is seen turning back to the size of the eurozone firewall, which was raised to E800bln on Friday, but most analysts say that the E500bln “fresh lending capacity” is deemed too small, given that is the amount required to potentially bailout Spain. So far, EMU peripheral spreads are uniformly tighter, with Spain 9bps tighter at +345bps.
EasyForexNews Research Team