German bunds maintain steady trade ahead of Q1 GDP data, May manufacturing PMI

The German bunds maintained a steady movement during European trading session Wednesday amid a muted trading session that witnessed data of little economic significance.

However, investors will be keeping an eye on the country’s gross domestic product (GDP) data for the first quarter of this year, due to be released on May 23 by 06:00GMT and the manufacturing PMI for the month of May, due on the same day by 07:30GMT, will add further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, traded nearly flat at -0.064 percent, the yield on 30-year note hovered around 0.591 percent and the yield on short-term 2-year remained tad higher at -0.615 percent by 10:15GMT.

In the bond market, having edged up yesterday (with 10-year yields briefly moving above 2.43 percent), USTs remained a touch firmer after St Louis Fed President Bullard – a voting member of the FOMC this year – suggested that December’s rate hike might have “slightly overdone it”, Daiwa Capital Markets reported.

ACGBs, meanwhile, reversed initial losses as the latest construction activity data showed a third consecutive large contraction in Q1.

Moving to Europe, government bonds have largely followed USTs, with yields down in most euro area member states (e.g. 10-year Bunds down 1bp to -0.08 percent ahead of today’s auction). In addition, Gilts have rallied (10-year yields down 3bps to 1.05 percent), the report added.

Meanwhile, the German DAX edged tad 0.49 percent higher to trade at 12,205.18 by 10:25GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 42.79 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex