Spain will sell up to a modest 2 billion euros of 2-, 3- and 5-year bonds, relying almost entirely on its domestic banks to absorb the issuance. Yields on the five-year paper are set to top 6 percent - the highest since before the introduction of the euro.
After the sale, Madrid will release the results of an independent audit of its banks - many of which are suffering from a rising number of bad real estate loans - and possibly make a formal request for European Funds to prop them up.
September Bund futures were 14 ticks higher at 140.63, with 10-year yields half a basis point lower at 1.605 percent.
"Bunds are only seeing risk-positive news at the moment," a trader said. "But volumes are very low and the market is looking oversold and talk of (Spanish and Italian) bond buying is really speculation at the moment."
Spanish and Italian bonds have rallied, and Bunds fallen, on speculation Europe's bailout schemes may be used for buying sovereign bonds in the secondary market, something Germany's Angela Merkel said was not being discussed.
The trader added the Fed's move to deliver another round of monetary stimulus was also underpinning Bunds.
France will also sell up to 8.5 billion euros of medium-term bonds, while the first readings of the June Purchasing Mangers Index (PMI) data are expected to show a further contraction in economic activity.