LONDON: German government bond futures retreated from a record high on Thursday hit by a fall in US Treasuries after Federal Reserve Chairman Ben Bernanke gave no signal the central bank would undertake further bond purchases.
An additional half a trillion euros of three-year European Central Bank funds added to the financial system on Wednesday briefly pushed Bund futures to an all-time high of 140.28 with the liquidity set to keep the market well supported.
March Bund futures were 13 ticks lower at 139.76 with 10-year yields up just over a basis point at 1.83 percent.
"Bunds are trading well against a backdrop of fairly risk-positive news so what happens when there's actually some bad news?" a trader said.
"It just feels like there's a wall of cash out there and some people are getting forced into the market with some of the technical moves we've seen lately."
Despite the modest reversal, UBS technical analyst Richard Adcock said the outlook for Bunds remained positive while they traded above 139.29, although for a longer-term advance a close above the trendline joining the September 2011 and January highs at 140.74 would be necessary.
The ECB's cash is also expected to help Italian and Spanish yields grind lower in the short-term and support Spain's sale of up to 4.5 billion euros of shorter-dated government bonds on Thursday.
France will also sell up to 8 billion euros of longer-dated bonds.
Bernanke told Congress that unless growth accelerated, the unacceptably high US unemployment rate would not keep dropping but he stopped short of signaling further bond purchases by the Fed.
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