German government bonds are opening higher Thursday following dovish comments from Fed Chairman Ben Bernanke at the FOMC news conference, which outweighed impact of the hawkish Fed projections. There were no surprises from the FOMC statement as it left the federal funds target unchanged at 0% to 0.25% and kept the “exceptionally low” rate regime through late 2014. The Fed projections were hawkish, which showed that central tendency forecasts for real GDP was 2.4% to 2.9% (vs.2.2% to 2.7% in January, for unemployment was 7.8% to 8.0% (vs. 8.2% to 8.5% in January), for PCE inflation was 1.9% to 2.0% (vs. 1.4% to 1.8% prior) and for core PCE was 1.8% to 2.0% (vs. 1.5% to 1.8% prior). However, Fed Chairman Ben Bernanke was perhaps more dovish Q&A in which his tone were seen as dovish and countered impact of the Fed projections. Whilst Bernanke said that the Fed has already “done a lot” to spur economic growth and reduce unemployment, he made clear that it may not be finished. Attention turns to Italy’s 6-month T-bill auction for E8.5bln. Also eyed are comments from ECB Draghi & Constancio.
EasyForexNews Research Team