22 Aug 2013
German bonds fell for another day
FXstreet.com (London) - German bonds continue to disappoint and this time on the Feds minutes.
The minutes revealed most policy makers were “broadly comfortable” with Bernanke's plan to reduce debt purchases this year. Meanwhile, 10 yr bund yields went to their highest since March 2012 when EZ data showed an improvement in services for August, giving the risky assets a boost as less demand for the safer plays reduced. However the euro was dumped on the release of the numbers, after a slight attempt to the upside the market went into the dollar and tested the lows towards 1.3300 handle. It is unclear on how markets will continue to react to the risk of Fed tapering, but we might expect bond yields in the EZ to rise amid the speculation on the ‘pace’ at which Bernanke reduces the Feds purchases. It is widely expected that the Fed will begin to reduce its purchases of $85B in bonds at its 17-18 September meeting. The markets will be looking to key data and today, focus in on the US and the weekly initial unemployment claims will be closely monitored after the impressive fall to just 320K last week. The results could prove a strong US labour market. The annual Jackson Hole conference for central bankers also starts today. However, there No prominent Fed speakers that are scheduled, so there shouldn’t be any new insight into Fed's monetary policy thinking.
The minutes revealed most policy makers were “broadly comfortable” with Bernanke's plan to reduce debt purchases this year. Meanwhile, 10 yr bund yields went to their highest since March 2012 when EZ data showed an improvement in services for August, giving the risky assets a boost as less demand for the safer plays reduced. However the euro was dumped on the release of the numbers, after a slight attempt to the upside the market went into the dollar and tested the lows towards 1.3300 handle. It is unclear on how markets will continue to react to the risk of Fed tapering, but we might expect bond yields in the EZ to rise amid the speculation on the ‘pace’ at which Bernanke reduces the Feds purchases. It is widely expected that the Fed will begin to reduce its purchases of $85B in bonds at its 17-18 September meeting. The markets will be looking to key data and today, focus in on the US and the weekly initial unemployment claims will be closely monitored after the impressive fall to just 320K last week. The results could prove a strong US labour market. The annual Jackson Hole conference for central bankers also starts today. However, there No prominent Fed speakers that are scheduled, so there shouldn’t be any new insight into Fed's monetary policy thinking.