German bunds slump after Eurozone January retail sales beat estimates; eyes on ECB’s policy decision

The German bunds slumped during European session Tuesday after the Eurozone’s retail sales for the month of January beat market expectations, along with a rise in Germany’s services PMI for February.

Investors will now keep a close eye on the European Central Bank’s (ECB) monetary policy meeting, due to be held on March 7 by 12:45GMT, which will add further direction to the debt market.

The German 10-year bond yields, which move inversely to its price, jumped 2 basis points to 0.180 percent, the yield on 30-year note surged 2-1/2 basis points to 0.824 percent and the yield on short-term 2-year rose nearly 1-1/2 basis points to trade at -0.497 percent by 11:25GMT.

In January 2019 compared with December 2018, the seasonally adjusted volume of retail trade increased by 1.3 percent in the euro area (EA19) and by 1.1 percent in the EU28, according to estimates from Eurostat, the statistical office of the European Union.

In December, the retail trade volume decreased by 1.4 percent in the euro area and by 1.3 percent in the EU28. In January 2019 compared with January 2018, the calendar adjusted retail sales index increased by 2.2 percent in the euro area and by 2.5 percent in the EU28.

The ECB is not expected to adopt any changes to forward guidance on interest rates but will probably downgrade its GDP and CPI forecasts at its monetary policy announcement on Thursday, according to the latest research report from Wells Fargo Economics.

A host of comments by central bank policymakers recently noted that the central bank will take to discuss possible adjustments to its TLTRO program ahead of its upcoming policy announcement later this week.  

Meanwhile, the German DAX remained tad lower at 11,577.46 by 11:30GMT, while at 11:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 21.13 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex