German bunds dive ahead of 30-year auction; February CPI remains steady

The German bunds dived Tuesday as investors remain keen to watch the 30-year auction, scheduled to be held on March 15 which will remain crucial in determining the future direction of the bond market.

Besides, markets shall remain hooked to assess Eurozone’s core consumer price inflation for the month of February, scheduled for release on March 16.

The yield on the benchmark 10-year bond, which moves inversely to its price, jumped nearly 1-1/2 basis points to 0.48 percent, the long-term 30-year bond yields rose nearly 1 basis point to 1.24 percent and the yield on short-term 3-year bond also traded nearly 1 basis point higher at -0.66 percent by 08:40 GMT.

The ECB kept all policy measures unchanged at last week’s meeting, which was in line with market expectations. However, Governor Mario Draghi had a hawkish tone during the Q&A session as he said the Governing Council discussed whether to remove the 'lower levels' from the forward guidance on policy rates.        

Further, on the very short-end, German yield curve, Draghi said the ECB was monitoring distortions. The market reacted by sending German government bond yields higher by around 5bp beyond the 10Y point.

Meanwhile, the German stock index DAX Index traded 0.12 percent higher at 11,978 by 08:40 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bullish at 80.51 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex