LONDON: Bund futures held firm near recent highs on Wednesday, supported by uncertainty over whether Greece will receive aid payments, though the immediate focus was on Italian and German debt sales.
While Greece is thought to have averted a near-term default after selling bills on Tuesday, international lenders disagree on how Athens can bring its debt down to a sustainable level, and a deal to release aid payments remains some way off.
"The final decision on the release of the next aid tranche is delayed ,which makes for pretty strong headline risks. All this suggests Bunds will remain underpinned at these lofty levels," said Commerzbank strategist Michael Leister.
Bund futures were 10 tick lower on the day at 143.04, having hit a two month high on Tuesday at 143.48 -- an area which technical charts suggested could provide significant resistance.
Despite the barriers to a fresh rise, traders said Bunds were unlikely to fall far from current levels with medium-term concerns about sluggish global economic growth, and the looming threat of recession-inducing tax hikes and spending cuts in the United States.
"There's no real reason for huge optimism in Greece -- stocks aren't trading well either and economic data looks weak so I think Bunds are OK at these levels," a trader said.
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