German bunds slump ahead of November CPI data, OPEC angst persists

The German bunds slumped Tuesday as investors await the November consumer inflation data scheduled to be released today at 13:00 GMT.

Also, doubts over OPEC ministerial gathering, in which oil producing countries are expected to strike an agreement on output cut, limited the growth in bund yields.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 1 basis points to 0.20 percent, the yield on long-term 30-year note climbed 1-1/2 basis points to 0.85 percent and the yield on short-term 2-year bond bounced 1/2 basis point to -0.75 percent by 09:20 GMT.

The German bunds as follows developments in oil markets because of their impact on inflation expectations. Crude oil prices fell on worries that the OPEC will be able to cut production output cut during a meeting on Wednesday. The International benchmark Brent futures fell 1.20 percent to $48.62 and West Texas Intermediate (WTI) dipped 0.89 percent to $46.66 by 07:30 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) is meeting officially in Vienna on Wednesday to discuss a planned production cut in an effort to curb overproduction that has dogged markets and more than halved prices since 2014, Reuters reported.

With a high degree of uncertainty going into the last 24 hours before the meeting, oil price volatility is expected to be high. There remains disagreement among OPEC-members over which producers should cut by how much, and a plan for non-OPEC oil giant Russia to participate has so far also failed, they added.

Moreover, Germany’s economic growth slowed in the third quarter of 2016 in the wake of weaker exports and minimal investment. The third quarter gross domestic product (GDP) growth remained unchanged at 1.5 percent y/y, lower than the market expectations of 1.7 percent y/y increase, from prior 1.5 percent. On a quarterly basis, it also stood flat at 0.2 percent q/q.

Also, German exports fell 0.4 percent q/q, from previous up 1.2 percent as Donald Trump presidency threatened to dent Germany's trade prospects.

ECB President Draghi, speaking to the European Parliament, said that monetary support is needed to hit the European Central Bank's inflation target, even as monetary policy needs 'decisive' support from other actors.

Lastly, investors will remain keen to focus on the upcoming economic data and events, highlighted by CPI data, retail sales, unemployment rate, manufacturing PMI.

Meanwhile, the German stock index DAX Index traded 0.28 percent higher at 10,615 by 09:20 GMT. While at 09:00 GMT, the FxWirePro's Hourly Euro Strength Index stood neutral at +41.52 (higher than +75 represents bullish trend).