Eurozone periphery bonds trade mixed after July CPI meets expectations, jobless rate cheers markets

The Eurozone periphery bonds traded mixed Monday after the region’s consumer price-led inflation index (CPI) for the month of July met market expectations and the rate of unemployment cheered investors, dropping from the previous.

The benchmark German 10-year bond yields, which moves inversely to its price, rose nearly 1 basis point to 0.55 percent, the French 10-year bond yields hovered around 0.81 percent, Irish 10-year bond yields flat at 0.85 percent, Italian down by 3 basis points to 2.09 percent, Netherlands 10-year bond yields traded 1-1/2 basis points higher at 0.67 percent, Portuguese equivalents slumped nearly 4 basis points to 2.88 percent and the Spanish 10-year yields traded 3 basis points lower at 1.49 percent by 09:10GMT.

Annual eurozone inflation held steady at a rate of 1.3 percent in July, comfortably below the central bank’s target rate, in a reading that is likely to ease the pressure on ECB policymakers as they head off for their summer breaks. On the other hand, the region’s unemployment rate has fallen to its lowest since February 2009 to 9.1 percent last month, from a downwardly revised 9.2 percent in May.

The focus tomorrow will be the initial estimate of euro area GDP in Q2, which is expected to show growth of 0.6 percent q/q. Among other top-tier euro area data releases, the latest retail sales figures, which are likely to signal that consumer spending remained firm at the end of Q2, are due on Thursday.

Indeed, this morning we have already seen German figures, which exceeded expectations with growth of 1.1 percent m/m, to leave them up 1.3 percent q/q in Q2, the firmest quarterly pace since Q315. In addition, the data flow this week also brings final PMIs: the manufacturing indices are due tomorrow, and the services and composite indices will be announced on Thursday.

Meanwhile, the pan-European STOXX 600 index rose 0.20 percent to 379.10, German DAX nearly flat at 12,168.25, France’s CAC 40 slipped 0.06 percent to 5,128.50 and the PSI20 Index traded 0.08 percent higher at 5,176.74 by 09:20 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 26.05 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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