Eurozone periphery bonds trade weak after consumer inflation remains unchanged in May

The Eurozone periphery bonds traded weak Friday after reading the zone’s consumer price inflation index (CPI) data, which remained unchanged during the month of May, compared to that in the previous month.

The benchmark German 10-year bond yields, which moves inversely to its price, jumped 2 basis points to 0.31 percent, the French 10-year bond yields, rose 1 basis point to 0.64 percent, Irish 10-year bond yield climbed nearly 1 basis point to 0.70 percent; however, Italian equivalent fell nearly 1 basis point to 1.96 percent, Netherlands 10-year bonds yield traded surged 1-1/2 basis points to 0.52 percent, Portuguese equivalents nose-dived remained almost flat at 2.86 percent and the Spanish 10-year yields traded 3 basis points higher at 1.45 percent by 09:20 GMT.

Eurozone inflation remained unchanged in May, at 1.4 percent y/y. However, on a monthly basis, the CPI index came in at -0.1 percent, down from 0.4 percent in April. Further, Eurozone wages increased at a slower pace in the first three months of this year, despite a pickup in economic growth that has seen unemployment rates fall to eight-year lows.

The slowdown in pay growth will likely reinforce the European Central Bank’s caution in the face of calls from Germany to remove its stimulus measures, since policy makers see a pickup in pay as essential to meeting their inflation target.

Meanwhile, the pan-European STOXX 600 index was up 0.67 percent at 388.64, German DAX rose 0.43 percent to 12,746.00, France’s CAC 40 climbed 0.80 percent to 5,258.80, and the PSI20 Index traded 0.54 percent higher at 5,291.15 by 09:40 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index stood neutral at 17.99 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex