LONDON: German Bund futures fell on Monday as equities rebounded but losses were seen capped before a US Federal Reserve meeting later this week that could shed light on its stimulus programme.
Concern the Fed could start reducing its debt purchases has stirred financial markets over the past few weeks, driving German 10-year yields to their highest levels in three months just above 1.60 percent.
Some of those moves reversed late last week after data showed the US economic recovery may not be strong enough to warrant an imminent change in the Fed's accommodative policy but trading was expected to remain choppy before the meeting.
"They (the Fed) believe that the economy is improving so higher yields are normal but you cannot let the market run too far ahead because that might threaten the recovery," said Piet Lammens, a strategist at KBC.
"For today there's a bit of a positive sentiment in equity markets and that's putting downward pressure on Bunds but going into the Fed most investors will stay sidelined so I'm not expecting much of a big move."
The Bund future was last 29 ticks down on the day at 143.57 while cash 10-year yields were up 2.4 basis points at 1.50 percent.
Most market participants said they expected yields to stay within last week's 1.47-1.62 percent range before the Fed's policy decision on Wednesday.
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