German bunds slide ahead of April employment report, consumer price inflation data

The German bunds slid during European trading session Monday amid a muted trading session that witnessed data of little economic significance ahead of the country’s employment report for the month of April, scheduled to be released on April 30 by 07:55GMT and the consumer price inflation (CPI) data for the similar period, due on the following day by 12:00GMT, which shall add direction to the debt market.

The German 10-year bond yields, which move inversely to its price, rose 1-1/2 basis points to 0.602 percent, the yield on 30-year note also edged 1-1/2 basis points higher to 0.644 percent and the yield on short-term 2-year traded 1 basis point up at -0.601 percent by 09:20GMT.

Data-wise, this week will be a very busy one in the euro area, with key releases including first estimates of Q1 GDP and April inflation. In particular, the first estimates of Q1 GDP in the euro area, France, Italy and Spain are due tomorrow.

"We expect growth in the euro area and France to remain unchanged from Q4 at 0.2 percent q/q and 0.3 percent q/q respectively, and also anticipate a moderation in growth in Spain of 0.1ppt from Q4 to 0.5 percent q/q – each of these forecasts is a touch softer than the Bloomberg consensus. Our forecast of Italian growth of 0.1 percent q/q – which would take the year-on-year rate into negative territory – matches the consensus," Daiwa Capital Markets said in its latest research commentary.

Other data due this week include the European Commission’s economic sentiment survey indices, due later today. The headline euro area ESI has declined in each of the past nine months, and given the drop in the flash consumer confidence index and further weakening in German and French manufacturing sentiment indices, another decline – which wold be consistent with the drop in the flash euro area composite PMI – is possible in April.

Euro area bank lending data are also due today, with German labour market and consumer confidence indices published alongside the aforementioned GDP and inflation figures tomorrow. Wednesday will be a national holiday in several member states, but ECB Vice President Luis De Guindos will speak publicly in London that day.

Thursday, meanwhile, brings the final estimates of the April manufacturing PMIs for the euro area and member states. In the bond markets, finally, tomorrow will see Germany sell 2-year Schatz and Italy sell 5-year and 10-year BTPs, Daiwa added.

Meanwhile, the German DAX remained tad 0.34 percent lower at 12,271.70 by 09:25GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -54.58 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex