Bunds fall as equities rise, Italian sale eyed

29 Nov, 2012

 

The treasury is seeking to place up to 6 billion euros of five- and 10-year bonds at an auction that could bring Rome within reach of its 460-465 billion euros ($594-$600 billion)2012 borrowing target.

 

Italian bond prices did not cheapen in the run-up to the auction this week but improved sentiment towards riskier euro zone debt after a deal on the next tranche of Greek aid should provide a favorable backdrop to the sale. Italy paid less than 1 percent on Wednesday to sell six-month bills - its lowest in more than two years.

 

"It might be an average auction because there is a bit of a lack of concession but then I think it probably trades okay afterwards given there is no more supply," one trader said.

 

German Bund futures fell 18 ticks to 142.77, taking their cue from higher equity markets buoyed by the latest rhetoric on the so-called US "fiscal cliff".

 

Markets have been and are expected to remain sensitive to comments by lawmakers on the progress of talks to avert $600 billion worth of automatic tax hikes and budget cuts next year until a deal is found.

Copyright Reuters, 2012

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