Japan Economy Grows 1.1% in Q2 as Consumer Spending Stalls 
Strait of Hormuz Shipping Near Standstill After New Vessel Attacks 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
European Stocks Edge Higher as Fed Rate Pause Bets Rise 
S&P 500 Retreats From Record High as AI Stocks Slide, Retail Sales Disappoint 
Gold Prices Rise as Weak US Data and Hormuz Risks Boost Safe-Haven Demand 
Morgan Stanley Sees Fed Holding Rates as U.S. Inflation Cools 
European Stocks Steady as U.S.-Iran War, Euro Zone Data Keep Investors Cautious 
France Inflation Rises 2.4% in July as Consumer Prices Increase 
US Dollar Slips as Soft Economic Data Eases Fed Rate Hike Expectations 
 - EconoTimes)
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In an article published on October 26th, we recommended selling 10-year bund after a breakout of 162.5 area with the first target being around 160 area and we forecasted the bund to drop towards 153 area. The story is available here, http://www.econotimes.com/FxWirePro-10-year-bund-heads-for-a-sell-breakout-367667
The first target has been reached. While most of the analysts are calling the drop in bond prices around the world as Trump effect (Donald Trump is the new President of the United States), we smell the threat of looming inflation, which we believe has to do more with the selloffs than the effect of Trump Presidency. However, it is a fact, that a win by Mr. Trump is influencing some commodities like copper but the rises in commodity prices were well under way.
German 10-year bund is trading at 0.27 percent; it was at -0.1 percent in early October. German 2-year bond is trading at -0.61 percent. While we suspect the 2-year yield to remain closely anchored to European Central Bank’s (ECB) negative interest rate, we expect the spread between 2-year and 10-year to widen further.
Hence, keep riding our recommended short call in bund and keep selling at rallies. Areas like, 163 and 164 are likely to act as key resistance.
