German Bund yields jump on firm CPI figure

The German bunds inched lower on Tuesday after the firm March consumer inflation figure. Also, investors ditched high-rated bonds to make room for ultra-long Netherland and French bonds coming to market, putting a halt on German Bund yields' push towards new lows. The yield on the benchmark 10-year Treasury note which moves inversely to its price, moved higher 32.48 pct to 0.155 pct and the yield on the 3-year Treasury bond rose 2.83 pct to -0.501 pct by 0920 GMT.

The consumer prices rose 0.3 pct y/y in March after staying flat in February. The preliminary inflation figures were unchanged. Moreover, food prices rose 1.3 pct from a year ago. Meanwhile, the decrease of 8.9 pct in energy prices had a considerable downward effect on overall inflation. Excluding energy, inflation was markedly higher at 1.4 pct. On m/m basis, the increase in consumer prices doubled to 0.8 pct, as estimated, from 0.4 pct a month ago. The harmonized index of consumer prices, which is calculated for European purposes, edged up 0.1 pct in March, reversing a 0.2 pct fall in February.

The Netherlands sell 0.75-1.25 billion euros of 30-year bonds, while France has begun marketing 20- and 50-year bonds for a syndicated sale.

The Bunds were reverse yesterday and with a new low at 163.43 so far. As such the 4th April low has already been tested ahead of 38.2 pct Fibo from the 10th March at 163.15 and 162.92 long term trend support. A bearish engulfing day Monday has worked out well today. An hourly trend is at 163.96 with a gap to 164.03, last at 163.47. On cash we note that 10-year German yields have doubled since the low point early on Monday, last at 0.155 pct.

Meanwhile, the Netherland's 10-year yields rose 9.33 pct at 0.374 pct and French 10-year yield jumped 5.32 pct at 0.492 pct by 1020 GMT.