LONDON: German government bonds edged lower at Tuesday's open as riskier assets rose on speculation the Federal Reserve Chairman may signal more monetary stimulus in testimony later in the day.
Ben Bernanke is expected to reiterate the central bank's stance that it will take further action only if economic conditions worsen but weak US retail sales and a lower International Monetary Fund global growth forecast on Monday have raised expectations.
"People are getting excited thinking he'll hint at (more quantitative easing) but risk assets usually do rally heading into these things," a trader said.
September Bund futures were 16 ticks lower at 144.88.
Any rise in Bund yields was set to be limited with safe-haven assets underpinned by a lack of confidence in euro zone leaders' ability to stem the debt crisis.
With yields on short-dated German bonds in negative territory, French, Austrian and Belgian bonds are also in demand from investors seeking even small returns.
Spanish bond yields rose again on Monday and borrowing costs are expected to stay high at sale of up to 3.5 billion euros of treasury bills later on Tuesday , a early test of sentiment before Thursday's bond sale.
Bunds may also get a lift if the July's ZEW survey of German analyst and investor sentiment falls more than expected.
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