German bunds plunge on improved business sentiment report; 30-year auction eyed

The German bunds plunged on Monday after data showed that the country’s business sentiment fell less than expected in July, which boosted share prices and reduced demand for safe-haven buying.

The yield on the benchmark 10-year bond rose 2 basis points to -0.008 percent, the yield on long-term 30-year note jumped 1-1/2 basis points to 0.505 percent and the yield on short-term 2-year note also climbed 1-1/2 basis points to -0.599 percent by 09:20 GMT.

The 10-year German yield remained at the upper end of a -0.15-0.00 percent range, with risks on the upside due to more optimism about the US economy and diminishing fears about any severe Brexit spillover to the Eurozone.

The tone of the July German Ifo survey turns out better than the market expectations, with the headline business climate indicator only easing modestly, to 108.3, higher than the forecast of 107.9, from 108.7 in June.

Lastly, investors will remain keen to focus on the 30-year bond auction, unemployment rate, CPI and retail sales. Meanwhile, the German stock index DAX Index trading 1 percent higher at 10,250 by 09:20 GMT.