Bunds are unable to hold onto their record highs as selling sets in later in the session, pushing the June contract back to around flat for the day. A lot of market-based rumors are flying around--coordinated action in the Fed/FX swap lines and fee reduction as well as a new one-year LTRO--causing volatile movements. Traders also cite investors selling "expensive" German paper and moving along the credit curve to pick up yield, with France and Austria the main beneficiaries Thursday. The earlier rally in Bunds was also supported by weaker-than-expected German PMI data. The June Bund contract is 0.02 higher at 144.08, after hitting a record high of 144.55, while the 10-year cash is offered at 1.38%.
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