German bunds trade tad higher after May consumer price inflation remains unchanged

The German bunds traded tad higher during European trading session Thursday after the country’s consumer price inflation (CPI) for the month of May rose, although the extent of gain remained steady when compared to that in April.

The German 10-year bond yields, which move inversely to its price, hovered around -0.241 percent, the yield on 30-year note traded nearly 1-1/2 basis points lower at 0.364 percent and the yield on short-term 2-year remained flat at -0.669 percent by 10:45GMT.

This morning brought the final German inflation figures for May, which unsurprisingly aligned with preliminary release, confirming the 0.8ppt drop in the EU-harmonised rate to 1.3 percent y/y, a thirteen-month low, Daiwa Capital Markets reported.

The national headline CPI rate also dropped 0.6ppt to 1.4 percent y/y. Within the detail, as expected, the most notable downward pressure related to prices of package holidays last month, with a drop of 9.0 percent y/y following the Easter-related surge in April (+11.2 percent y/y).

As such, services inflation declined 0.9ppt to 1.2 percent y/y. So, while goods inflation moved sideways at 1.8 percent y/y, this left core CPI down 0.5ppt to 1.3 percent y/y, the report added.

Meanwhile, the German DAX traded 0.46 percent lower at 12,100.98 by 09:25GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -12.41 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex