German bunds narrowly mixed ahead of next week’s CPI inflation

The German bunds traded narrowly mixed Friday ahead of the release of consumer inflation data scheduled for next week. Also, the United States President-elect Donald Trump’s first news conference on Wednesday failed to provide any clarity on the future market movements. Investors now await further clarification of future fiscal and economic policies.

Eurozone spreads are mixed, but peripheral yields are also falling, and Gilt and Bund yields flattened at the long end of the curve. Data releases had limited impact and while robust German 2016 GDP number and stronger-than-expected EMU November production may have underpinned Bund underperformance.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose nearly 1 basis point to 0.32 percent, the long-term 30-year bond yields also moved 1-1/2 basis points higher to 1.05 percent while the yield on short-term 2-year bond hovered around -0.71 percent by 09:00 GMT.

We foresee that bond prices will keep drifting between small gains and losses ahead of the European Central Bank monetary policy meeting, which is scheduled to take place on January 19.

Lastly, markets will primarily focus on the German consumer and producer price inflation data due to be released next week amid a host of economic events in the Eurozone and United States, including CPI and industrial production.

Meanwhile, the German stock index DAX Index traded 0.44 percent higher at 11,571.50 by 09:35 GMT, while at 9:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 13.06 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex