LONDON: German Bund futures inched higher on Thursday after the Federal Reserve offered no clear indication that its monetary policy path might change any time soon, allowing markets to turn their attention to a looming Italian debt auction.
The US central bank offered a slightly brighter assessment of the economic outlook, but reiterated that interest rates will not rise until at least late 2014.
Bond investors are expected to largely shrugg off the outcome of the meeting and position cautiously for an Italian bond sale on Friday.
The auction will be closely watched by investors across asset classes as a gauge of appetite for debt issued by one of the countries most vulnerable to a flare-up in the debt crisis.
"Bunds are unlikely to embark on any material move before tomorrow's eagerly awaited BTP auctions. We hence take a neutral stance throughout the day," Commerzbank rate strategists said in a note.
Bund futures were 14 ticks higher on the day at 140.34. The contract has fallen steadily after hitting a record high of 141.37 on Monday, but strategists say worries about public finances in Spain and Italy could mean that the level could be tested again soon.
"I still think Bunds are for buying on dips," one trader said.
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