French bonds gain on weak CPI data, International Monetary Fund’s global growth outlook

The French bonds gained on Wednesday as International Monetary Fund cuts 2016 global economic growth outlook to 3.2% and reading weak March consumer inflation figures. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, moved down 4.20 pct to 0.497 pct and the yield on the 3-year Treasury bond dipped 3.63 pct to -0.386 pct by 0900 GMT.

French consumer price index edged down 0.1 pct y/y in March, marking its second successive monthly drop, which was revised down from the 0.2 pct drop reported earlier. In February, prices had fallen 0.2 pct. Energy costs fell 6.9 pct annually in March, as prices of petroleum products slumped by 13.2 pct. At the same time food prices grew 0.4 pct and cost for services climbed by 0.9 pct. On a monthly basis, consumer prices rose 0.7 pct in March, in line of market consensus, faster than previous month's 0.3 pct spike.

The EU measure of inflation, or HICP, dropped 0.1 pct yearly in March, confirming the preliminary figure. On monthly basis, the harmonized index of consumer prices registered an increase of 0.8 pct as estimated earlier.

Crude oil prices also lost ground early Wednesday as traders took profit following the overnight surge, underscoring the growing mixed views that key oil producers could agree on a production freeze this Sunday. The International benchmark Brent futures fell 0.58 pct to $44.42 and West Texas Intermediate (WTI) tumbled 1.83 pct to $41.40 by 0905 GMT.

Also, the International Monetary Fund lowered its world growth estimates for 2016 and 2017 on Tuesday in its latest World Economic Outlook. The French growth outlook was reduced to 1.1 pct, as compared to earlier forecast of 1.3 pct.