German Bunds gain on weak equities, heavy bonds redemption

The German Bunds gained on Friday as investors pour into safe-haven assets while digesting slowdown in Chinese Q1 GDP figure. Also, heavy European bonds redemption supported the bunds prices to move up. The benchmark 10-year bunds yield, which is inversely proportional to the price of bunds, fell 12.20 pct to 0.145 pct and 2-year bonds yield dipped 0.61 pct to -0.497 pct at 0950 GMT.

China’s Q1 GDP rose to 6.7 pct y/y, trending in the line of market expectation (6.7 pct y/y), as compared to 6.8 pct in the previous quarter. Individually, growth in primary, secondary and tertiary sector slowed down to 2.9 pct y/y, 5.8 pct y/y and 7.6 pct y/y, from 3.9 pct y/y, 6.0 pct y/y and 8.3 pct y/y, respectively. Moreover, March Industrial production figures jumped to 6.8 pct y/y, higher than the market consensus of 5.9 pct y/y, as compared to 5.4 pct in the February. The March retail sales also climbed 10.5 pct y/y, more than the market expectation of 10.4 pct y/y, from 10.2 pct in February.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The crude oil futures are trading lower around $43.00, down from $44.50 in the earlier session as Iran’s oil minister said that he will not attend the Doha oil talks at the weekend but an Iranian representative will be there, underscoring the growing mixed views that key oil producers could agree on a production freeze this Sunday. The International benchmark Brent futures fell 0.87 pct to $43.44 and West Texas Intermediate (WTI) tumbled 1.01 pct to $41.08 by 1000 GMT.

Moreover, around EUR36.49 billion of European bonds are due to redeemed today, includes Finland-EUR6.5 billion, Netherlands -EUR13.75 billion and Italy-EUR16.24 billion, underpinning bunds further up.

Meanwhile, the German stock index DAX Index leaped 0.52 pct at 10,041 by 1000 GMT.