LONDON: German Bund futures fell on Wednesday, one day after US manufacturing data provided some relief to riskier assets, but trade was expected to remain range-bound ahead of a bout of important events this week, including a Spanish debt sale.
Data on Tuesday showing US factory activity grew in April at the strongest rate in 10 months momentarily soothed concerns the world's largest economy had lost momentum at the beginning of the second quarter, but analysts will be looking to important jobs data on Friday for further clues.
For now, the data gave investors an opportunity to cash in on German Bunds, when they reopened after May 1 public holiday and after the contract hit a record high last week.
"As we are at very lofty high levels, we have a tendency to be negative on the Bund. Not so much on a longer-term perspective, but we think the upside has very little value any more," Piet Lammens, strategist at KBC said.
"Even (though) in momentum terms we sometimes think the Bund can go higher, we are very cautious to tell our clients that they have to buy the Bund at this level."
Spain will sell bonds on Thursday - the first test of sentiment towards its debt after a two-notch downgrade last week pushed 10-year yields back towards the key 6 percent level.
Investors will look to the European Central Bank meeting on Thursday to assess whether recent weak economic data has been bad enough to start the central bank thinking about rate cuts again and whether there is any hint it is prepared to resume its bond-buying programme. The central bank is expected to keep interest rates at 1 percent.
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