Markets

Bunds slip as Dutch supply eyed

Published July 3, 2012 Updated July 3, 2012 07:17am

Spanish bonds were also expected to come under some pressure before an auction on Thursday.

It will be the first test of market sentiment since the European Union summit last week surprised markets by agreeing measures to stabilise bond markets, with the country expected to sell up to 3 billion euros of paper.

Markets' euphoria over the summit has dimmed as investors turned to potential risks such as the insufficient size of the rescue fund and the ratification process in each member state.

Bund futures were last 17 ticks lower at 141.51 with German 10-year yields up 1.5 basis points at 1.53 percent .

"It almost feels like the selling in Bunds was done before the summit plus we're getting into a week where potentially the ECB are going to cut rates and are going to be dovish so core rates are getting some support," a trader said.

"People seem to be sidelined before the meeting. The lack of detail from the summit is becoming a bit of an issue and obviously now people are coming out and exhibiting their various stances with some of the triple-A countries playing fairly hard ball and there'll be noise around that," he said.

A majority of analysts expect the ECB to move to support the region's economy by cutting its main refinancing rate by 25 basis points to 0.75 percent at its policy meeting on Thursday.

Copyright Reuters, 2012