German government bonds trading higher Friday, with yield curve flatter ahead of the key US payrolls data. Bunds opened higher on position-squaring ahead of the US payrolls data and continued uncertainty over the Greek PSI deal, where further cracks in discussions are beginning to emerge. Greek officials are now turning to “OSI”, or official sector involvement, according to eKathimerini. Also noted are headlines in the UK press that Brussels “discovers a new E15bln black hole in Greece finances”, which confirms talks earlier this week that Greece’s funding needs from the second bailout package has increased again to E145bln from E130bln prior. Bunds paid little attention to European Jan services PMI at 50.4 versus flash estimate of 50.5 and 48.8 in December. Bunds then came under pressure on back of strong selling in UK Gilts after following release of stronger than expected UK CIPS/Markit Jan services PMI at 56.0 vs MNI median estimate of 53.2. Prices then bounced on headlines that the Eurogroup meeting on Greece for Monday won’t be held as conditions have not yet been met.
EasyForexNews Research Team