German Bunds tumble as U.S. crude stockpile rises to 9.4mln

German bond yields erased from its early gains on Wednesday amid following weak oil prices after EIA said in a report that they have a big build-up of crude stocks. German 10-year yields, an European benchmark closed down 2bps at 0.20%, which was trading up at 0.24% earlier after a series of hawkish comments made by the Federal Reserve policymakers on the U.S. economy.

Moreover, U.S. and Brent crude futures tumbled around 3% on Wednesday after the U.S. government reported that crude stockpiles rose 9.4 million barrels last week.

According to David Keeble, global head of fixed income strategy at Credit Agricole's also confirmed that the big increase in crude inventories has sent the oil price and Bund yields down.

Apart from this, yesterday Germany sold 0.81 billion euros of 30-year bonds, which also constrained bunds to correct.

We foresee that European government bonds will feel the pinch, if Federal Reserve officials continue to speak in dovish tone for raising interest rates more aggressively than investors have been predicting, making fixed-income assets less attractive in the near future.

Meanwhile, German 10 year bund yield trading down -2.51% at 6:22 AM London time.