LONDON: German Bund futures traded in tight ranges early on Thursday with investors expecting little from the European Central Bank policy meeting and as an impasse in US budget talks left them without clear direction.
The ECB is likely to keep interest rates on hold later in the day but may offer clues on its policy path for next year with updated forecasts likely to present a grim outlook for the euro zone economy.
"The ECB will keep the door open for maybe another refi rate cut early next year," Patrick Jacq, European rate strategist at BNP Paribas said.
"I think there will be no change from the latest press conference in early November. That's probably why the market is relatively stable today ahead of the meeting."
On Nov 8, ECB President Mario Draghi said the euro zone economy showed little sign of recovering before the year-end, leaving open the possibility of an interest rate cut in the months ahead.
German Bund futures were down 12 ticks on the day at 143.68. The December contract rolls over this session and the March contract was down 12 ticks on the day at 144.98.
"I don't think many people are expecting a cut, but people generally are expecting a slight dovish tone overall," one trader said.
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