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The German bunds traded flat during European session Tuesday ahead of the country’s 5-year auction, scheduled to be held on July 3 by 09:40GMT and eurozone’s retail sales for the month of May, due for release the following day by 09:00GMT, for further direction in the debt market.
The German 10-year bond yields, which move inversely to its price, hovered around -0.352 percent, the yield on 30-year note jumped 2-1/2 basis points to 0.268 percent and the yield on short-term 2-year remained flat at -0.748 percent by 10:00GMT.
German retail sales figures for May fell short of expectations. Contrasting with an expected increase, sales declined for the second successive month and by 0.6 percent m/m. And while the drop in April was less severe than initially estimated, sales were still down a hefty 1 percent m/m, Daiwa Capital Markets reported.
Nevertheless, to some extent reflecting the steady growth over the past year, sales were still up an impressive 4 percent y/y in May, with spending on food up more than 2-1/2 percent y/y, non-food sales up more than 5 percent y/y and internet and mail order purchases up more than 8 percent y/y.
Those annual rates were flattered to some extent by the additional working day this year compared with last. Indeed, today’s release clearly suggested that household consumption has weakened considerably after a surge in the first quarter of the year – in the first two months of Q2, retail sales were 1 percent lower compared with the average in Q1.
"And this further supports our view that the boost to GDP at the start of year won’t be repeated in Q2, with our forecast for economic growth to moderate to 0.1 percent q/q from 0.4 percent q/q in Q1," the report added.
Meanwhile, the German DAX traded 1.33 percent higher at 12,563.43 by 10:10GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 18.69 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex
