German bunds jump ahead of ECB President Lagarde’s speech, Q4 GDP

The German bunds jumped during European trading session Monday ahead of the European Central Bank (ECB) President Christine Lagarde’s speech, scheduled to be delivered on February 11 by 14:00GMT, besides, the country’s gross domestic product (GDP) for the fourth quarter of this year, due by later this week, which shall provide further directon to the debt market.

The German 10-year bond yield, which move inversely to its price, slumped 2 basis points to -0.401 percent, the long-term 30-year yield also lost nearly 2 basis points to 0.122 percent and the yield on short-term 2-year slipped a little over 1 basis point to -0.647 percent by 11:15GMT.

One focus in the euro area this week will be Friday’s release of German Q4 GDP data. Given the marked weakness in December’s retail sales and production figures, Germany’s economy now looks to have gone into reverse in the final quarter of 2019, Daiwa Capital Markets reported.

"We forecast growth of -0.1 percent q/q, to mark the second quarterly decline in the past three and leave each of the three largest euro area member states in contraction. As such, we also see a risk that the updated euro area GDP figure (also due Friday) will revise down growth from the flash estimate of 0.1 percent q/q, 1.0 percent y/y," the report commented. 

Friday will also bring euro area employment figures for Q4, which, despite the softer economic backdrop, are likely to show that growth stepped up slightly from the 0.1 percent q/q increase of Q3, Daiwa further noted in the report.

Meanwhile, the German DAX traded tad -0.24 percent lower at 13,480.66 by 11:20GMT.