Monday, August 27, 2012

German govt bonds august 27 2012

German govt bonds august 27 2012 : German government bonds drifted lower on Monday as markets awaited further details of a European Central Bank plan to buy troubled euro zone countries' debt and a speech by Federal Reserve chief Ben Bernanke due at the end of the week.

Bunds saw their biggest weekly rise since early July on Friday but pared some gains in after-hours trading after a Reuters report, citing central bank sources, said that the ECB was considering setting yield band targets under its bond-buying programme.

Without flesh on the bones of the ECB's plans, analysts said German Bunds were likely to rise again in the short term. Many market participants may stay on the sidelines before Bernanke's Jackson Hole appearance, which will be scoured by investors looking for fresh hints of more U.S. monetary easing.

With many in the market on holiday and investors reluctant to place directional bets before September when numerous decisive events take place, prices have been volatile in recent weeks.

Speculation on what the ECB's proposal to buy bonds of troubled euro zone countries may look like and resurgent risks of a Greek euro zone exit have been behind the volatility.

Next month is likely to prove pivotal with the ECB's policy meeting on Sept. 6 followed by the German Constitutional Court's ruling on the euro zone's permanent bailout fund on Sept. 12.

Data out of the euro zone's biggest economy only reinforced a downbeat economic outlook. German business sentiment dropped for a fourth month in a row in August to reach its lowest level since March 2010, driven lower by increasing worries about the future level of exports.

German 10-year bond yields were 2.2 basis points higher at 1.35 percent.

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