Eurozone periphery bonds mixed ahead of benchmark German 30-year auction

The Eurozone periphery bonds remained mixed Monday as investors wait to watch the benchmark German 30-year auction, scheduled to be held on June 21. Also, the country’s manufacturing PMI for the month of June, due for release on June 23 will provide further direction in the money market.

The benchmark German 10-year bond yields, which moves inversely to its price, rose nearly 1 basis point to 0.28 percent, the French 10-year bond yields, hovered around 0.63 percent, Irish 10-year bond yield slumped 2 basis points to 0.68 percent; however, Italian equivalent plunged nearly 4 basis points to 1.95 percent, Netherlands 10-year bonds yield traded flat at 0.48 percent, Portuguese equivalents nose-dived nearly 6 basis points to 2.85 percent and the Spanish 10-year yields traded nearly 3 basis points lower at 1.43 percent by 08:30 GMT.

Eurozone inflation remained unchanged in May, at 1.4 percent y/y. However, on a monthly basis, the CPI index came in at -0.1 percent, down from 0.4 percent in April. Further, Eurozone wages increased at a slower pace in the first three months of this year, despite a pickup in economic growth that has seen unemployment rates fall to eight-year lows.

The slowdown in pay growth will likely reinforce the European Central Bank’s caution in the face of calls from Germany to remove its stimulus measures since policy makers see a pickup in pay as essential to meeting their inflation target.

Meanwhile, the pan-European STOXX 600 index was up 0.81 percent at 391.70, German DAX jumped 0.95 percent to 12,873.50, France’s CAC 40 climbed 0.95 percent to 5,312.50, and the PSI20 Index traded 0.39 percent higher at 5,294.67 by 09:10 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index stood neutral at -13.54 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex