German bunds plunge on hopes of fall in Q4 GDP; eyes on 30-year auction

The German bunds plunged Monday as investors look forward to a decline in the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on February 14 by 07:00GMT. Also, market participants are eyeing the 30-year auction, besides the January CPI and eurozone’s GDP, all due on the same day for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, jumped 2 basis points to 0.77 percent, the yield on 30-year note surged 1-1/2 basis points to 1.37 percent and the yield on short-term 2-year traded tad higher at -0.56 percent by 08:50GMT.

The most notable day for new euro area data this week will be Wednesday when the preliminary (second) estimate of Q4 euro area GDP is due. No revisions are expected, with the initial estimates of 0.6 percent q/q and 2.7 percent y/y set to be confirmed. This assumes that there won’t be any significant surprises from Germany and Italy, which will announce their first estimates the same day: the forecast is for the growth of 0.6 percent q/q in the former, and 0.4 percent q/q in the latter, Daiwa Capital Markets reported.

Also notable that day will be December’s euro-area industrial production figures. The figures from the larger member states are consistent with an increase of a little less than 1/2 percent m/m, which would leave the annual pace soaring from 3.3 percent y/y to around 4-1/2 percent y/y, the highest since 2011. Thursday, meanwhile, will bring euro area trade data for December and new car registration figures for January.

Meanwhile, the German DAX jumped 2.00 percent to 12,348.73 by 08:55GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bearish at -93.37 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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