German government bonds are opening moderately lower Wednesday, with prices seen underpinned ahead of the Italian T-bill auction and also key political events in Europe. German Chancellor Angela Merkel and French President Francois Holland are scheduled to meet today before European leaders hold a two-day summit that ends Friday. Merkel has made clear that she will not give in to any calls for joint liabilities at the EU summit and her comment of no joint eurozone bonds “as long as I live”, dampens speculation that the EU Summit will produce anything meaningful to solve the eurozone sovereign debt crisis. Traders also note comments from Merkel, who told parliamentarians yesterday that she is not happy about the EU reform proposals of EU Van Rompuy. Traders agree that Rompuy also omitted any details on how these plans will be implemented. Also noted were rumors, later denied, that Italian PM Monti might resign if the eurozone did not take action to lower debt costs for the peripherals, is seen weighing on sentiment ahead of Italy’s new 6-month T-bill auction for E9.0bln. US sells 7-year Notes for $35.0bln.
EasyForexNews Research Team