German Bund futures rose on Friday, bouncing back after three straight sessions of losses, as investors positioned for a busy calendar of monetary policy meetings and data next week. Bonds were supported by a Wall Street Journal report that the Fed may debate changing its forward guidance to underline the message that it will keep rates low for a long time to come.
Markets have become very sensitive to any clues on the timing of a potential US stimulus withdrawal, which ultimately will depend on incoming data. There will be plenty of that next week, with US jobs the highlight. The Federal Reserve, the Bank of England and the European Central Bank also all hold policy-setting meetings next week, making investors cautious, analysts said.
"The Journal story has caused a bit of short-covering in the market. But flows are very light and I think we would have done that anyway today after the sell-off this week and with such a busy next week ahead," one trader said. German Bund futures were 18 ticks higher on the day at 142.46, but remained almost two full points lower then at the end of last week, having fallen on generally upbeat data. Volumes were less than 500,000 lots, compared with over 800,000 in the previous two sessions, showing there was more conviction in the sell-off than in the rebound.
"People actually want to be short this market," the trader said. French consumer confidence bounced up in July, data showed on Friday, adding to a rush of releases this week suggesting the euro zone economy was picking up and easing pressure on the European Central Bank for a rate cut. Richard Adcock, technical analyst at UBS, said only a closing break under 142.13 would trigger a more extended sell-off. A second trader said the Bund would meet resistance at 142.80 - a 21-day moving average - and to the downside 142 was the first support, followed by 141.61. Italian and Spanish bonds were flat at 4.41 percent and 4.59 percent, respectively.
Comments
Comments are closed.