German bunds mixed on weak economic data, firm crude

The German bunds were trading mixed on Friday as investors pour into safe-haven assets after reading weak consumer inflation and retail sales figure. On the other hand, a rallying crude oil price is supporting the bunds yield. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved down 2.41 pct to 0.243 pct and the yield on the 2-year bonds rose 0.81 pct to -0.489 pct by 0920 GMT.

The Germany March retail sales tumbled 1.1 pct m/m, against market expectation of 0.3 pct m/m rise, from down 0.4 pct in February. On annual basis, it rose tad 0.7 pct y/y, consensus was for 2.2 pct y/y, from prior 5.5 pct.

Yesterday, the Germany's April HICP inflation declined 0.1 pct y/y, below markets consensus expectations of zero, down from 0.1 pct. This downside surprise is as foreshadowed by the country's state CPI releases earlier. The rate is only a 2-month low. But it raises the prospect that the corresponding Eurozone figure, due on Friday, may fail to rise from -0.1% as expected. While recovering oil prices should mean that inflation trends higher going forward, it will remain low enough to concern the ECB. Moreover, April unemployment change plunge by 16K, against no change was expected, from revised 3K decline in March. Meanwhile, the unemployment rate stood at 6.2 pct (frozen from 4-month).

The German bonds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices touched to 6-month high due to weak dollar and decline in United Sates output. Meanwhile, the International benchmark Brent futures rose 0.48 pct to $48 and West Texas Intermediate (WTI) climbed 0.80 pct to $46.40 by 0920 GMT.

Meanwhile, the German stock index DAX Index fell 1.02 pct at 10,215.5 by 0920 GMT.