German government bonds trading lower Friday amid optimism that the second Greek bailout package will be approved on Monday. Mar Bunds opened lower as risk-appetite improved with stocks higher after MNI flash China survey. Bunds attempted to rally on Spiegel story that the German Christian Social Union (CSU) — German Chancellor Angela Merkel’s CDU ally — may block the Greek bailout deal in the lower house of parliament vote on Feb 27. However, the risk-on sentiment prevailed on continued optimism that the second Greek bailout package will be approved by eurozone finance ministers on Monday following supportive comments from German FinMin spokesman Kotthaus saying “getting closer to a solid result in Greece”. In addition, German Merkel held a conference call with Italy Monti and Greek Papademos and expressed optimism over a deal. Bunds were also pressured by weakness in UK Gilts following stronger than expected UK Jan retail sales data. However, prices rebounded as markets took note of the deflator component, which came in at +2.2% y/y — lowest level in 2-years.
EasyForexNews Research Team