German bunds gain ahead of ECB’s monetary policy decision, Eurozone May CPI

The German bunds gained during European session Wednesday as investors wait to watch the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on June 14 and eurozone’s consumer price inflation for the month of May, due on June 15 will provide further direction to the debt market.

The German 10-year bond yields, which move inversely to its price, slumped 1-1/2 basis points to 0.47 percent, the yield on 30-year note plunged nearly 2 basis points to 1.16 percent and the yield on short-term 2-year too traded tad lower at -0.61 percent by 09:20GMT.

Today will bring euro area IP figures for April. Given the data released by the largest member states, this is expected to show a decrease in output in excess of 1.0 percent m/m, potentially the steepest in almost two years. Q1 employment data are also due and – like yesterday’s French figures – seem likely to show ongoing jobs growth, albeit probably a touch down on the 0.4 percent q/q average rate in 2017, Daiwa Capital Markets reported.

Final Spanish inflation figures for May are also due – the flash estimate of the headline annual CPI rate on the EU-harmonised measure saw a marked 1.0ppt rise on the month to 2.1 percent y/y, a 13-month high. In the bond market, Germany will sell 10Y Bunds while Italy will sell off bonds with a wide range of maturities. 

Meanwhile, the German DAX rose 0.58 percent to 12,838.65 by 09:30GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -143.17 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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