Bund futures opened lower on Wednesday, tracking losses in U.S. Treasuries after a Federal Reserve official said it should trim its bond-buying campaign, encouraging expectations of broadly tighter monetary policy. At 0611 GMT, Bund futures were 28 ticks lower at 121.22. Treasuries fell in the U.S. session on hawkish Federal Reserve statements and a poor five-year note sale.
Portuguese and Greek bonds also looked set to remain pressured after a new round of rating downgrades.
"Fed was hawkish and that is weighing on Bunds as well, it's reminding people the ECB (European Central Bank) is going to hike next week," one trader said.
Another trader said higher risk appetite suggested by rising stock markets was also weighing on Bunds, while it would not help Greek, Portuguese and Irish government bonds.
"We're going to have the Irish stress tests on Thursday and there's going to be speculation about that as well," the second trader said.
Italy auctions 3.4-4.5 billion euros of a new three-year BTP and reopens auctions of 2.5-3.25 billion euros ten-year BPTs and 1-1.5 billion euros of a 2017 CCTeu (Euribor-linked floating rate bond).
The sale is expected to be well bid due to solid domestic demand and as Italy and Spain have recently decoupled from troubled markets in Portugal, Greece and Ireland.
source: REUTERS
