EURO GOVT-Bunds up with Treasuries after solid U.S. auction

LONDON, Dec 30 (BestGrowthStock) – German government bonds opened
higher on Thursday, pulled up by a rally for U.S. Treasuries
after a strong seven-year note auction, with dealers eyeing a
sale of Italian longer-dated bonds.

The Treasury sale followed a disappointing 5-year offering
on Tuesday and had the highest participation of indirect bidders
since June 2009 as investors extended duration and offset short
positions ahead of year-end.

March Bund futures (FGBLc1: ) rose 60 ticks to 125.37.
Two-year bond yields (DE2YT=TWEB: ) fell 2.4 basis points to 0.864
percent, with 10-year yields (DE10YT=TWEB: ) almost 5 bps lower at
2.96 percent.

Italy will sell up to 6 billion euros of 2013 and 2021 bonds
as well as up to 2.5 billion euros of floating-rate certificates
[ID:nRMERNE6BX].

Barclays Capital notes that both Italian bonds have
underperformed not only Bunds, but also their Spanish
equivalents since mid-December.
“Past auction concessions have tended to reverse post the
supply and thus we see room for some tightening in the next few
days against both other peripherals and versus the …core,
especially as liquidity conditions normalise,” Barclays Capital
strategists said.

The sale comes after gross yields at an auction of zero
coupon bonds and six-month bills on Wednesday spiked higher in
the current holiday-thinned market [ID:nLDE6BR127].

EURO GOVT-Bunds up with Treasuries after solid U.S. auction