German government bunds jump after Merkel fails to secure outright majority

The German government bunds jumped Monday after investors moved towards safe-haven assets, following the German election results, which overcast a shadow of doubt as Chancellor Angela Merkel failed to secure an outright majority to form a government.

Also, the country’s Ifo Business Climate Index for the month of September disappointed markets, coming in at 115.2, vs expectations of 116, from 115.9 in August. Now, investors are looking forward to the ECB President Mario Draghi’s speech, scheduled to be held today by 13:00GMT.

The German 10-year bond yields, which moves inversely to its price, slumped nearly 5 basis points to 0.40 percent, the yield on the 30-year note plunged 4-1/2 basis points to 1.18 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.70 percent by 11:35GMT.

The Ifo German research institute said its Business Climate Index dipped to a seasonally adjusted 115.2 this month from a reading of 115.7 in August, missing forecasts for 116.0. The Current Assessment Index decreased to 123.6 in September from 124.7 a month earlier and below expectations for 124.8.

The Business Expectations Index, which measures attitudes toward business prospects over the next six months, inched down to 107.4 this month from 107.8, falling short of forecasts for a reading of 107.9.

Meanwhile, the German DAX traded 0.22 percent higher at 12,620.00 by 11:40 GMT, while at 11:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bearish at -85.16 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex