German bunds mixed ahead of ECB President Draghi’s speech, 2-year auction

The German bunds remained mixed during European session Monday ahead of the European Central Bank (ECB) President Mario Draghi’s speech, scheduled to be held today by 14:00GMT and the country’s short-term 2-year auction, due on January 29 by 10:40GMT, for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, remained tad lower at 0.195 percent, the yield on 30-year note hovered around 0.783 percent and the yield on short-term 2-year slipped 1 basis point to -0.587 percent by 09:40GMT.

It should be a busy week for new economic data releases in the euro area bringing the first estimates of Q4 GDP. The figures for the euro area are due on Thursday, with the headline growth rate expected to be unchanged from the previous quarter, at 0.2 percent q/q.

Besides GDP, the preliminary euro area inflation data for January will also be received on Friday. With energy CPI set to have remained on a downward trend, the headline rate will probably take another hit – expectations are for a 0.3ppt drop to 1.3 percent y/y, a rate last seen in April before energy inflation took off. Nevertheless, core inflation is likely to remain unchanged at 1.0 percent y/y, which is bang in line with its average in recent years, Daiwa Capital Markets reported.

With the exception of the euro area unemployment figures, which are due on Thursday, other most notable data releases will be economic sentiment surveys. The European Commission survey is out on Tuesday – echoing the preliminary PMIs, this will probably be consistent with a further weakening in economic momentum.

And at the end of the week, the final manufacturing PMIs will be watched too. Today will bring bank lending data for December. In the bond market, Italy will issue new government bonds on today and tomorrow, while auctions of 2-year and 10-year Bunds are scheduled for tomorrow and Wednesday respectively, the report added.

Meanwhile, the German DAX slipped -0.24 percent to 11,255.28 by 09:50GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -13.12 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex