German bunds rally as Donald Trump win fuels market turmoil, energy prices tumble

The German bunds rallied Wednesday after the United States Republican candidate Donald Trump pinned his victory against Democrat opponent Hillary Clinton in the 2016 presidential election.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 5 basis points to 0.131 percent, the yield on long-term 30-year note dipped 3 basis points to 0.755 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.650 percent by 09:20 GMT.

Market is in panic as Trump's anti-trade stance would jeopardise trade with China and other emerging market economies. His anti-immigration policies could also create labour shortages in the U.S. economy. Business confidence would take a hit and new downside risks to the economy are likely to reduce the probability of a December rate hike by the Federal Reserve.

Following this news, the global bonds prices surged as investors sought safe-haven assets. The U.S. 10-year bond yield fell 6 basis points to 1.80 percent, the Australian equivalents dipped 10-1/2 basis points to 2.256 percent, the UK 10-year gilt yield tumbled 3 basis points to 1.208 percent and the Japanese 10-year note yield inched 2 basis points lower to -0.08 percent.

Trump’s victory is the latest political shock to financial markets, following the U.K.’s June vote to leave the European Union. Also, Trump, who compared his candidacy to the Brexit vote, has criticized Yellen, saying she kept rates too low during Obama’s tenure, and suggested that if he won he’d probably nominate someone else to lead once her term expires in 2018, reported Bloomberg.

Moreover, energy prices tumbled following the U.S. election result. The International benchmark Brent futures fell 1 percent to $45.58 and West Texas Intermediate (WTI) tumbled 1.27 percent to $44.41 by 09:20 GMT.

Lastly, investors remain keen to focus on the upcoming 2-Year Schatz auction, consumer and producer inflation data.                                                                                                

Meanwhile, the German stock index DAX Index traded 1.07 percent lower at 10,372.50 by 09:20 GMT.