German bunds flat in muted trading ahead of ECB President Draghi’s speech, Q1 GDP data

The German bunds remained flat during European trading session Monday ahead of a speech by European Central Bank (ECB) President Mario Draghi, scheduled to be held on May 22 by 07:30GMT and the country’s gross domestic product (GDP) data for the first quarter of this year, due to be released on May 23, amid an otherwise muted trading session that witnessed data of little economic significance.

The German 10-year bond yields, which move inversely to its price, traded flat at -0.100 percent, the yield on 30-year note hovered around 0.547 percent and the yield on short-term 2-year too remained steady at -0.646 percent by 11:00GMT.

The coming week will bring first top-tier economic survey results for May including, on Thursday, the flash PMIs. In April, the euro area composite PMI fell 0.3pt to 51.3, below the Q1 average, to suggest a slight loss of momentum at the start of Q2.

In particular, the euro area services PMI fell 0.8pt to 52.5 while the manufacturing PMI rose 0.4pt but remained very weak at 47.9. Thursday will also bring the May business surveys from the German Ifo Institute and France’s INSEE. Other May survey results include the European Commission’s flash consumer confidence index tomorrow, Daiwa Capital Markets reported.

Among the hard data releases due in the coming week, Thursday will bring the final estimates of German Q1 GDP (initial estimate 0.4%Q/Q) including publication for the first time of the expenditure components. Besides, the publication of the account of the Governing Council’s April monetary policy meeting, is also due on the same day and ECB President Draghi will speak publicly on Wednesday.

Lastly, politics-wise, the elections to the European Parliament, to be held from Thursday (starting in the Netherlands and Ireland) to Sunday – with the largest euro area member states voting on the weekend – will be watched for any further significant increase in representation of populist and nationalist parties which could impede future EU policymaking and impact the appointments of the next heads of the EU institutions, which are due to be made shortly, the report added.

Meanwhile, the German DAX suffered -1.31 percent to trade at 12,078.83 by 11:05GMT, while at 11:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -0.28 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex