German bunds gain slightly after Eurozone’s April core CPI matches expectations; ECB President Draghi’s speech in focus

The German bunds slightly gained on Wednesday after reading the Eurozone’s consumer price inflation index (CPI) for the month of April, released today that matched consensus estimates. Investors are all looking forward to Germany’s 30-year bund auction due late today which will provide detailed direction in the debt market.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 0.42 percent, the long-term 30-year bond yields also slipped 1 basis point to 1.24 percent and the yield on the short-term 3-year bond traded 1/2 basis point lower at -0.61 percent by 09:10 GMT.

The final Eurozone CPI inflation reading for April was confirmed at 1.9 percent, in line with the flash rate, and compared with a rate of 1.5 percent the previous month. The core inflation rate was also confirmed at 1.2 percent from 0.7 percent previously with both figures in line with consensus expectations.

The core rate was above the 0.7 percent recorded for April 2016 and the strongest reading since 2013. Energy prices rose 7.6 percent on the year compared with 7.4 percent previously with food and drink prices rising 1.5 percent on the year from 1.8 percent previously.

In addition, the overall increase for industrial goods outside the energy sector held steady at 0.3 percent. The services sector inflation rate, however, increased sharply to 1.8 percent from 1.0 percent previously and compared with a 0.9 percent recorded for April 2016.

Meanwhile, the German stock index DAX Index fell 0.36 percent to 12,758.00 by 09:30 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 71.06 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex