Eurozone periphery bonds gain on safe-haven demand post softer German trade balance data

The Eurozone periphery bonds gained on the last trading day of the week, as investors poured into safe-haven instruments after Germany’s registered a softer trade surplus for the month of April, released earlier today.

The benchmark German 10-year bond yields, which moves inversely to its price, fell 1 basis point to 0.26 percent, the French 10-year bond yields, slumped 3-1/2 basis points to 0.63 percent, Irish 10-year bond yield traded also plunged 3-1/2 basis points to 0.66 percent, Italian equivalent nose-dived 6-1/2 basis points to 2.12 percent, Netherlands 10-year bonds yield remained nearly flat at 0.47 percent, Portuguese equivalents hovered around 3.04 percent and the Spanish 10-year yields slipped nearly 3-1/2 basis points to 1.44 percent by 08:30 GMT.

Germany’s adjusted trade surplus was stable at EUR19.8 billion. Economists polled by The Wall Street Journal had forecast a surplus of EUR20.0 billion. German exports have picked up notably since the start of the year, led by stronger demand from China and India.

The ECB has taken the reference that short-term interest rates could fall further out of its statement. The majority of analysts had expected that. However, above all Draghi underlined that core inflation is moving sideways at low levels and is not showing any signs of rising towards the 2 percent target.

Even though it is generally expected that the ECB will announce in September that from January the asset purchases will gradually be tapered. That does not mean that there will be rate rises right away, as Draghi made it clear explicitly again yesterday that first of all the asset purchases have to have come to a complete end.

Meanwhile, the pan-European STOXX 600 index was up 0.06 percent at 389.40, German DAX rose 0.45 percent to 12,772.25, France’s CAC40 climbed 0.53 percent to 5,287.50, and the PSI20 Index traded 0.29 percent higher at 5,253.07 by 09:00 GMT and the FxWirePro's Hourly Euro Strength Index stood slightly bearish at -79.05 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex