German government bonds are opening moderately lower Wednesday amid moderate risk-on after Chinese PMI from the semi-official CFLP and from HSBC came in above expectations and ahead of Germany’s 10-year Bund re-opening auction. The move lower in Bunds comes following impressive bounce yesterday after weaker than expected US Jan consumer confidence, Chicago PMI, Nov S&P Case Shiller Unadjusted Home Index and -1.8% U.S. Redbook January store sales data. Bunds are also seen underpinned by continued uncertainty surrounding the Greek PSI deal. Italian bonds are seen underpinned by strong reinvestment flow today, where maturing 5.00% 2012 BTP for E25.81bln and coupon payment for E9.87bln is due. However, some of this cash may have been recycled back at Monday’s BTP auction. Also eyed today is bond supply from Germany & the UK. Portugal sells 3-month & 6-month T-bills. Focus is also on US Treasury refunding announcement for 3-year Note, 10-year Note and 30-year Note, where markets expect sizes to come in unchanged from the previous refunding at $32bln, $24bln and $16bln, respectively.
EasyForexNews Research Team