German bunds climb after January retail sales disappoint market expectations

The German bunds climbed after the country’s monthly retail sales unexpectedly declined in January, data showed on Friday, in a sign that private consumption may remain weak in early 2018 after failing to make any contribution to growth in Europe’s biggest economy in the fourth quarter.

The German 10-year bond yields, which move inversely to its price, slumped nearly 2-1/2 basis points to 0.62 percent, the yield on the 30-year note fell 1-1/2 basis points to 1.27 percent and the yield on short-term 2-year too traded 1-1/2 basis points lower at -0.55 percent by 08:45GMT.

Germany’s retail sales fell by 0.7 percent on the month in real terms, data released by the Federal Statistics Office showed Friday. That missed the Reuters consensus forecast for a 0.9 percent rise and came after an upwardly revised drop of 1.1 percent in December.

Private consumption has been a key growth driver in recent years as consumers benefit from rising wages, record-high employment, and strong job security but data published last week showed foreign trade propelled Germany’s fourth-quarter expansion of 0.6 percent.

On the year, retail sales increased by 2.3 percent, missing a Reuters consensus forecast for a 3.5 percent increase.

Meanwhile, the German DAX fell 1.30 percent to 12,030.50 by 08:50GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 3.58 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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