German bunds gain despite rise in eurozone’s January CPI

The German bunds gained during European trading session Friday even as eurozone’s consumer price inflation (CPI) for the month of January rose, meeting market expectations, while the country’s retail sales disappointed market sentiments, slumping, far from the previous reading in December.

The German 10-year bond yield, which move inversely to its price, slipped nearly 1 basis point to -0.414 percent, the long-term 30-year yield also lost nearly 1 basis point to 0.087 percent and the yield on short-term 2-year too suffered tad nearly 1 basis point to -0.664 percent by 11:15GMT.

Euro area annual inflation is expected to be 1.4 percent in January 2020, up from 1.3 percent in December according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in January (2.2 percent, compared with 2.0 percent in December), followed by energy (1.8 percent, compared with 0.2 percent in December), services (1.5 percent, compared with 1.8 percent in December) and non-energy industrial goods (0.5 percent, stable compared with December).

Lastly, Germany’s retail sales fell by 3.3 percent m/m in real terms after a downwardly revised rise of 1.6 percent in the previous month, data released by the Federal Statistics Office showed Friday, beating Reuters forecast for a drop of 0.5 percent.

Meanwhile, the German DAX traded tad -0.35 percent down at 13,110.16 by 11:25GMT.