German bunds slump as oil rises above $50 a barrel

The German bunds slumped on Thursday as investors cooled on safe-haven instruments amid gains in riskier assets including crude oil and equities. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 1 basis points to 0.160 percent by 0900 GMT.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices crossed $50 mark for first time in seven months after the U.S. government reported a larger-than-expected drop in crude inventories. According to the US DOE, crude inventories decreased 4.2 million barrels, as compared to a build of +1.3 million barrels seen prior for the week ending 20 May. This came alongside an increase seen in gasoline inventories of +2.0 million barrels, from a draw of -2.5 million barrels seen prior and a decrease in distillate inventories of -1.3 million barrels, against a draw of -3.2 million barrels. The International benchmark Brent futures rose 0.70 pct to $50.09 and West Texas Intermediate (WTI) jumped 0.69 pct to $49.90 by 0630 GMT.

Yesterday, German GfK consumer sentiment index rose to 9.8 heading into June, against market expectations for 9.7, unchanged from previous 9.7. Moreover, the Germany's IFO Business Climate index for May rose to 107.7 (highest since December), more than the markets consensus of 106.8. Both the current assessment and expectations components improved, the former to a 9-month high.

Meanwhile, the German stock index DAX Index rose 0.21 percent at 10,227 on rallying crude prices by 0900 GMT.