German Bund yields hit technical resistance

Some traders believe the selling pressure in the German government debt space might continue given the on-going worries surrounding the situation in Greece.

That comes as some Eurozone officials were reportedly growing increasingly worried that Greek authorities were bent on waiting until the last possible minute in a bid to force their creditors to “blink”.

Against that backdrop, in a research note e-mailed to clients on Wednesday morning ,analysts at Unicredit said “we do not see any element that could stop the sell-off in the next couple of days.”

As of 08:23, the yield on the benchmark 10-year German government bond was four basis points higher at 0.992%.

“In this scenario, 10Y Bunds could re-test the 0.997% resistance level observed intraday since the European Central Bank meeting. The latest headlines suggest that the European Commission and the Greek government are still some way apart and a solution is still far away, so pressure on GGBs should continue,”

On a somewhat more positive note, Craig Erlam, senior market analyst at Oanda, was of the following opinion: “Greek uncertainty is still very apparent in the markets and is likely to continue to weigh on investor sentiment. There are signs of occasional progress but there is very much a case of two steps forwards and one step back about this process.”

Erlam noted the hard-to-interpret political moves in Greece recently. On Tuesday, Greece’s prime minister, Alexis Tsipras, called on his Syriza party to back him as he tries to negotiate a deal. “This alone was a rather bizarre rallying cry given the speech he gave to parliament on Friday in which he slammed creditor proposals as 'absurd' which is hardly going to drive support for a deal.”