The Eurozone periphery bonds remained mixed Tuesday after reading the surprise jump in the benchmark Germany’s Business Climate Index, released today by the Munich-based institute Ifo. Also, the German and Eurozone consumer price inflation indices, scheduled for release on July 28 will add further direction to the debt market.
The benchmark German 10-year bond yields, which moves inversely to its price, jumped nearly 1-1/2 basis points to 0.51 percent, the French 10-year bond yields hovered around 0.75 percent, Irish 10-year bond yields slipped nearly 1 basis point to 0.80 percent, Italian tad lower at 2.04 percent, Netherlands 10-year bond yields remained slightly higher at 0.63 percent, Portuguese equivalents climbed nearly 1 basis point to 2.90 percent and the Spanish 10-year yields traded flat at 1.48 percent by 08:30GMT.
The business climate in Europe’s largest economy improved for a sixth month in July, according to Munich-based Ifo Institute. The index, based on a survey of 7,000 German companies from manufacturing, trade and construction, rose to 116.0 from a revised 115.2 in June. That’s the highest level since 1991 and compares with a median estimate in a Bloomberg survey for a drop to 114.9.0 GMT.
Further, Ifo’s measure of current economic conditions improved to 125.4 from a revised 124.2, and a gauge of expectations rose to 107.3 from 106.8.
Lastly, if the euro remains at or above current levels, it is likely increasingly to have a bearing on the euro area economic outlook, weighing somewhat on GDP growth via net trade and – most notably – likely subtracting more than 0.25ppt from headline CPI around the turn of the year, increasing significantly the chances that inflation will at least temporarily fall below 1.0 percent y/y in the first quarter of 2018.
Meanwhile, the pan-European STOXX 600 index traded 0.48 percent higher at 381.04, German DAX climbed 0.33 percent to 12,248.50, France’s CAC 40 rose 0.66 percent to 5,160.75 and the PSI20 Index traded 0.12 percent higher at 5,271.10 by 08:40 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 64.26 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex
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