LONDON: German government bonds fell on Tuesday as a report that Berlin may make concessions over a new aid package for Greece boosted investors' appetite for risk, although uncertainty over the country's debt crisis kept yields near four-month lows.
The European Union is racing to draft a second bailout package for indebted Greece to release vital loans next month and avert the risk of the euro zone country defaulting.
The Wall Street Journal Germany said Germany was considering concessions in efforts to support the country by dropping its push for an early rescheduling of Greek bonds. June Bund futures were 26 ticks lower at 125.43 with the first support coming at Friday's low of 125.33 and resistance at Friday's high of 125.79.
"People have been thinking the rally is overdone, but it keeps going and keeps sucking them in," said a trader.
"Shorts are being stopped out by the day and we will need to see two or three days of bearish trading to be able to call the top to this rally but until we get something sorted regarding Greece we can stay in the up trend."
Two-year bond yields rose 2 basis points to 1.604 percent and 10-year yields rose 3 basis points to squeeze above the 3.00 percent level by a basis point. The knock-on effect from any Greek default was highlighted as Fitch cut Cyprus's sovereign rating to A- from AA-, saying it was concerned at the high level of exposure its banks had to Greek debt and the impact that it could have on the island's finances.
Copyright Reuters, 2011
Comments
Comments are closed for this article.