German bund yields plunge despite tad lower GfK consumer climate; eyes on May jobless data

The German bund yields plunged during European trading session Tuesday despite a tad lower reading of the country’s GfK consumer climate, released early today. Investors shall now be looking forward to the country’s unemployment data for the month of May and short-term 5-year auction, both scheduled for May 29 by 07:55GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, slumped 4 basis points to -0.157 percent, the yield on 30-year note plunged nearly 5 basis points to 0.491 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points lower at -0.653 percent by 09:45GMT.

The message from this morning’s consumer confidence survey from Germany was less upbeat than of late, with the GfK’s headline index (which is reported as a forecast for June) declining 0.1pt to 10.1, a more than two-year low. This followed a downward revision to May’s reading by 0.2pt to 10.2, leaving it unchanged from April’s level at the lowest since December, Daiwa Capital Markets reported.

While households remained broadly upbeat about their income expectations, they were again more downbeat about the economic outlook, with the relevant index falling to a more-than three-year low. And so their willingness to buy slipped back in May too, albeit still remaining at a relatively elevated level.

Following last week’s European Parliament elections, this evening will see EU leaders meet for the first group discussion on the appointments of the next heads of various EU institutions, including the ECB. However, this evening’s dinner seems highly unlikely to reach agreement, so further discussions are likely to be required in June and perhaps even July, the report added.

Meanwhile, the German DAX edged tad 0.39 percent higher to trade at 12,057.96 by 09:50GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 16.75 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex