EURO GOVT-Bunds dip, Portugal likely to face more pressure

LONDON, Dec 1 (BestGrowthStock) – Bund futures opened lower on
Wednesday ahead of a five-year German bond sale, while a warning
that Portugal could face a credit rating cut looked set to keep
peripheral debt markets under pressure.

At 0605 GMT, the Bund future (FGBLc1: ) was 11 ticks lower at
127.91 after rallying by nearly a point in the previous session
and in line with slightly weaker Treasuries overnight.

“We had a good session yesterday and there’s a bit of supply
later on… but it looks like another volatile day,” a trader
said.

Standard & Poor’s warned after the European close on Tuesday
that it could cut Portugal’s credit ratings if the country’s
growth prospects weaken further or if private creditors become
subordinated to public creditors in a possible financial aid
program. [ID:nN30292510]

“There was substantial ECB buying yesterday but spreads
still ended wider… and this certainly doesn’t help,” the
trader added.
The S&P warning comes as Portugal auctions 500 million euros
of Treasury bills, with yields are likely to hit a euro-era high
as markets continue to pile pressure on the region’s heavily
indebted sovereigns. [ID:nLDE6AT134]

The German finance agency later plans to sell up to 5
billion euros of five-year debt, which will be closely watched
for signs of weakness after poor demand at the latest 10-year
Bund auction.

“The ongoing jitters in the Eurozone government bond market
do not necessarily ensure stellar-looking auction results,” said
Commerzbank rate strategist David Schnautz.

The 10-year German bond yield (DE10YT=TWEB: ) was 2.624
percent, up 1 basis points while the two-year Schatz yield
(DE2YT=TWEB: ) was down half a basis point at 0.855 percent.

(Reporting by William James; editing by Patrick Graham)

EURO GOVT-Bunds dip, Portugal likely to face more pressure