German bunds suffer in silent trading session; 5-year auction, ECB President Draghi’s speech in focus

The German bunds suffered during European session Tuesday amid a silent trading session that witnessed data of little economic significance. Investors will now be eyeing the country’s 5-year auction and European Central Bank (ECB) President Mario Draghi’s speech, scheduled to be held today by09:40GMT and on September 27 by 13:30GMT respectively.

The German 10-year bond yields, which move inversely to its price, rose 1-1/2 basis points to 0.476 percent, the yield on 30-year note also surged 1-1/2 basis points to 1.136 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.543 percent by 08:50GMT.

Major European equity markets opened higher on Tuesday but gains were limited amid prevailing trade war concerns. Elsewhere, 10-year Bund yields rose slightly above 0.54 percent today, the highest since May 22 after ECB President Mario Draghi conveyed a message of increased confidence at the Governing Council about reaching the inflation target, according to the latest report from Eurobank Economic Analysis & Financial Markets Research.

In FX markets, the USD was firmer on the day ahead of this week’s two-day FOMC policy meeting, which concludes on Wednesday and a 25bps rate hike is almost fully-priced in. Brent crude oil rose to USD81.69/barrel earlier today, the highest since November 2014 on mounting supply woes, the report added.

Beyond the economic data, after Draghi’s comments yesterday generated some excitement, the comments of his key ECB Executive Board colleagues Praet and Cœuré – who will be speaking publicly today – should be watched.

Meanwhile, the German DAX remained tad higher at 12,354.71 by 09:05GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bullish at 76.82 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex