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German bunds little changed as investors await FOMC July minutes

The German bunds traded nearly flat Wednesday as investors awaited the July Federal Reserve meeting minutes in an attempt to predict the central bank's likely step to hike interest rates in the upcoming monetary policy meeting, particularly in the wake of the UK’s Brexit vote.

The yield on the benchmark 10-year bond hovered around -0.029 percent mark, the yield on short-term 30-year note remained steady at 0.48 percent and the yield on short-term 2-year bond fell ½ basis points to -0.612 percent by 10:10 GMT.

The minutes from the 26 - 27 July FOMC meeting will be published on Wednesday, 17 August at 18:00 GMT. Investors will remain keen to focus on this release in an attempt to predict the central bank's likely step to hike interest rates in the upcoming monetary policy meeting, particularly in the wake of the UK’s Brexit vote.

In terms of economic data release, the August German ZEW investor sentiment survey turns out better than we had expected, with the headline figure rising to 0.6 from -6.8 in July, but is weaker than the market consensus expectation of 2.0. On the other hand, the current conditions sub-index rises more sharply, to 57.6 in August from 49.8 in July, far exceeding the market consensus prediction of 50.0.

Lastly, the German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The crude oil prices dipped for the first time in a week but remained in sight of six-week highs. The International benchmark Brent futures fell 0.85 percent to $48.81 and West Texas Intermediate (WTI) dipped 0.94 percent to $46.14 by 10:10 GMT.

Meanwhile, the German stock index DAX Index traded 0.78 percent lower at 10,593 by 10:10 GMT.

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