German bunds gain after investors defy higher Q1 economic growth

The German bunds gained Friday after investors largely shrugged-off the country’s higher economic growth during the first quarter of this year, released today, that matched market expectations.  Also, the German consumer price inflation (CPI) for the month of April, came in line with anticipations but was defied by market participants.

The yield on the benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 0.41 percent, the long-term 30-year bond yields plunged nearly 2-1/2 basis points to 1.20 percent and the yield on the short-term 2-year bond traded 1 basis point lower at -0.67 percent by 08:40 GMT.

The German economy picked up speed in the first quarter of 2017, driven by higher investment in construction, machinery and equipment, robust household and state spending as well as strong exports, the Federal Statistics Office said on Friday.

Europe's biggest economy grew by 0.6 percent on the quarter in the January-March period after 0.4 percent in the final three months of 2016, the data showed. This was in line with the consensus forecast in a Reuters poll and the strongest quarterly growth rate since the first quarter of 2016 when the economy expanded by 0.7 percent.

Meanwhile, the German stock index DAX Index traded 0.12 percent higher at 12,725.50 by 09:10 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -13.81 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex