German bunds trade narrowly mixed ahead of ECB’s monetary policy decision

The German bunds traded narrowly mixed Wednesday as investors await the European Central Bank’s monetary policy decision for future market directions, which is scheduled to be released on October 20.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 0.03 percent mark, the yield on long-term 30-year note fell 1 basis point to 0.65 percent and the yield on short-term 3-year bond climbed 1/2 basis point to -0.66 percent by 08:30 GMT.

The European Central Bank (ECB) is scheduled release its monetary policy decision on Thursday, 20th October and we foresee that the central bank to keep policy steady and wait until December to unveil a possible extension and tweaks its Quantitative Easing programme. Additionally, President Mario Draghi's presser will be scrutinized closely as investors assess both the scope for further easing and eventual tapering.

Moreover, the German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Crude oil prices clawed back minor gains in early Asia trade Tuesday following an overnight decline but trading is expected to be muted now that the market has priced in a potential production cut. The International benchmark Brent futures rose 1.60 percent to $52.48 and West Texas Intermediate (WTI) jumped 1.07 percent to $50.83 by 08:30 GMT.

Lastly, investors will remain keen to focus on the upcoming German 30-year bund auction, ECB monetary policy decision and German Buba President Weidmann speech.

Meanwhile, the German stock index DAX Index traded 0.17 percent lower at 10,612.50 by 08:30 GMT.