Eurozone periphery bonds jump after German CPI remains unchanged; German Q2 GDP in focus

The Eurozone periphery bonds jumped Friday after benchmark Germany’s consumer price inflation remained unchanged for the month of July. Also, investors wait to watch the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released by early next week.

The benchmark German 10-year bond yields, which moves inversely to its price, slumped 3 basis points to 0.38 percent, the French 10-year bond yields plunged nearly 3-1/2 basis points to 0.68 percent, Irish 10-year bond yields fell 2 basis points to 0.71 percent; however, Italian 10-year bond yields up nearly a basis point to 2.02 percent, Netherlands 10-year bond yields down 2 basis points at 0.52 percent, Portuguese equivalents slipped nearly 1 basis point to 2.83 percent and the Spanish 10-year yields traded 1-1/2 basis points lower at 1.43 percent by 09:20GMT.

German inflation figures, already released this morning, fully aligned with the flash estimate and showed that the EU-harmonised measure moved sideways last month, at 1.5 percent y/y, only 0.1ppt higher than the lowest rate over the last eight months seen in May.  The national measure was slightly stronger – while it also confirmed its flash estimate of 1.7 percent y/y, it was up by 0.1ppt from the previous month, and its breakdown showed that the core rate inched slightly higher to reach the highest level since November 2014.

Further, equivalent French figures also brought no significant surprises. The EU-harmonised and national measures confirmed their preliminary readings of 0.8 percent y/y and 0.7 percent y/y, both unchanged from the previous month. And with Spanish final inflation estimate also fully aligned with the preliminary reading of 1.7 percent y/y, the equivalent figures for the euro area as a whole, due next Thursday, look set to bring no changes, showing that inflation was stable at 1.3 percent y/y in July.   

Meanwhile, the pan-European STOXX 600 index slumped 1.14 percent to 371.77, German DAX fell 0.45 percent to 11,960.50, France’s CAC 40 plunged 1.17 percent to 5,055.30 and the PSI20 Index traded 1.20 percent lower at 5,189.85 by 09:20 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -26.80 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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