German bunds suffer despite improvement in ZEW economic sentiment index; 5-year auction in focus

The German bunds slightly gained during European session Tuesday after investors had shrugged-off an improvement in the country’s ZEW economic sentiment index for the month of March, beating market expectations as well. Also, the country’s 5-year auction, scheduled to be held on March 20, besides, the European Union leaders’ summit, due to on March 21, shall provide further direction to the debt market.

The German 10-year bond yields, which move inversely to its price, rose 1-1/2 basis points to 0.093 percent, the yield on 30-year note also edged 1-1/1 basis points higher to 0.748 percent and the yield on short-term 2-year hovered around -0.527 percent by 11:40GMT.

The ZEW Center for Economic Research said that its index of German economic sentiment rose to -3.6 points this month from a reading of -13.4 in February, above analysts' expectations for a rise to -11 points.

"The significant increase in the ZEW Indicator of Economic Sentiment shows that major economic risks are considered to be less dramatic than before. The possible delay in the Brexit process as well as the renewed hope for a deal on the UK’s withdrawal from the EU seem to have given rise to more optimism among financial market experts," said Achim Wambach, ZEW President, in a press release.

Meanwhile, the German DAX remained 0.89 percent higher at 11,761.84 by 11:45GMT, while at 11:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 56.83 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex