Eurozone periphery bonds plunge post ECB President Draghi’s speech; all eyes on benchmark German CPI

The Eurozone periphery bonds plunged Tuesday after reading the European Central Bank (ECB) President Mario Draghi’s speech. Markets are looking forward to the release of benchmark German consumer price inflation for the month of June, due on June 29 for further direction in the debt market.

The benchmark German 10-year bond yields, which moves inversely to its price, jumped 3-1/2 basis points to 0.28 percent, the French 10-year bond yields, also surged 3-1/2 basis points to 0.64 percent, Irish 10-year bond yield traded tad higher at 0.68 percent, Italian equivalent climbed nearly 2 basis points to 1.91 percent, Netherlands 10-year bonds yield traded nearly 3-1/2 basis points higher at 0.48 percent, Portuguese equivalents rose 2 basis points to 2.94 percent while the Spanish 10-year yields traded 1 basis point higher at 1.38 percent by 08:50 GMT.

According to the latest speech by ECB’s Draghi, at an annual forum organised by the central bank in Sintra, the anti-euro sentiment has faded away in the past year after the United Kingdom opted to leave the European Union. He further added that the central bank will need to be gradual when adjusting policy parameters

A piece from The Economic Times cited Draghi recalling his feeling of "sadness" immediately after the shock Brexit vote last year. At the time, economic growth in Europe "was still weak and political uncertainty high.... (People) who were always against the euro, the European project, a minority of European citizens, were more vocal than ever," he added.

"Not least due to lower energy price inflation, we expect euro area headline CPI to fall for the second successive month to 1.2 percent y/y, from 1.4 percent y/y in May, but euro area core CPI to inch up 0.1ppt to 1.0 percent y/y," Daiwa Markets commented in its recent research report.

Meanwhile, the pan-European STOXX 600 index was down 0.79 percent to 385.96, German DAX fell 0.66 percent to 12,685.00, France’s CAC 40 slumped 0.68 percent to 5,260.30 and the PSI20 Index traded 0.42 percent lower at 5,212.83 by 09:10 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index stood highly bullish at 168.19 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest