German bunds gain ahead of ECB policy decision

The German bunds gained on Monday as investors remain cautious ahead of the European Central Bank policy decision, scheduled to take place on Thursday at 11:00 GMT.

The yield on the benchmark 10-year bond fell 2 basis points to -0.017 percent, the yield on long-term 30-year note also dipped 2 basis points to 0.510 percent and the yield on short-term 2-year note slid 1 basis point to -0.650 percent by 09:10 GMT.

The European Central bank is also expected to leave interest rates intact in its monetary policy meeting scheduled to be held on July 21 and the meeting will be dominated by Brexit. Also, the European Central Bank will not ease monetary policy any further at its meeting next week, according to an overwhelming majority of respondents in a Reuters poll of euro money market traders on Monday.

There is also a good chance that the ECB may adjust its bond-purchase programme to raise the allocation to the higher-yielding, more indebted countries, due to the increasing shortage of government bonds meeting the central bank's minimum yield of -0.4 percent. Flash Eurozone sectoral PMIs for July are also awaited, as is the German ZEW survey for July.

O Friday, the Eurozone June CPI (final) rose +0.2 percent (+0.1 percent y/y) coming in the line of market consensus of +0.2 percent (+0.1 percent y/y) from +0.4 percent in May. The Eurozone May trade balance SA + EUR 24.5 billion, bit lower than the market consensus of +EUR 25.0 billion, from previous +EUR 25.4 billion revised down from +EUR 28.0 billion. Moreover, exports SA -1.9 percent m/m (+2.0 percent y/y) and imports SA -1.5 percent m/m (-2.0 percent y/y).

Meanwhile, the German stock index DAX Index trading up 0.06 percent at 10,071 by 09:10 GMT.