EURO GOVT-Bunds dip, more pressure on euro periphery likely

LONDON, Dec 7 (BestGrowthStock) – Bund futures dipped on Tuesday, in
line with U.S. Treasuries, with the euro zone issuers struggling
with high debt likely to face more pressure after finance
ministers took no fresh steps to tackle the crisis.

At 0710 GMT, the Bund future (FGBLc1: ) was 12 ticks lower at
126.45.

EU finance ministers meet to discuss the economy after euro
zone ministers on Monday chose to stand by their action so far
against the currency bloc’s mounting banking and debt problems,
confounding calls for an enlarged financial safety net.
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“That will be only slightly positive for Bunds, but
certainly disappointing for the periphery,” a trader said.

“We’ve already seen a retracement of Thursday and Friday’s
performance and official buying was more muted yesterday. This
should compound that disappointment and we would expect further
profit taking and sellers come into the market.”

Ireland, the second recipient of a bailout from the European
Union and International Monetary Fund this year, will present
its austerity budget to parliament later in the session.
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“In all likelihood the government will not survive many more
months but with Ireland already effectively insolvent there
would appear to be little alternative to passing this budget,”
Rabobank strategists said in a note.

Any delay in passing the budget was likely to add to
nervousness over the region’s higher yielding states, analysts
said.

The 10-year German bond (DE10YT=TWEB: ) yielded 2.87 percent
in early trade, up 2 basis points, while the two-year Schatz
yield (DE2YT=TWEB: ) rose 1 basis point to 0.821 percent.

(Reporting by William James; editing by Patrick Graham)

EURO GOVT-Bunds dip, more pressure on euro periphery likely