German bunds flat after May services PMI exceeds estimates; eyes on ECB’s policy decision

The German bunds remained flat during European session Wednesday after the country’s services PMI for the month of May exceeded market expectations, while investors will keep a close eye on the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on June 6 at 11:45GMT for further detailed direction in the debt market.

The German 10-year bond yields, which move inversely to its price, hovered around -0.205 percent, the yield on 30-year note traded flat at 0.407 percent and the yield on short-term 2-year too traded nearly steady at -0.652 percent by 09:10GMT.

Germany’s headline seasonally adjusted IHS Markit services PMI Business Activity Index came in at 55.4 in May. This was down only slightly from April's seven-month high of 55.7 and signalled a rate of expansion that was above the historical series average.

Further, eurozone’s IHS Markit PMI Composite Output Index rose to 51.8 in May, up from April’s 51.5 and slightly better than the earlier flash reading (51.6). The latest index reading was the highest for three months, and extended the current period of continuous growth to just under six years.

Lastly, in April, compared with March, the seasonally adjusted volume of retail trade decreased by 0.4 percent in the euro area (EA19) and by 0.3 percent in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In March 2019, the retail trade volume remained unchanged in the euro area and increased by 0.3 percent in the EU28.

Meanwhile, the German DAX traded 0.25 percent higher at 11,998.10 by 09:15GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bullish at 77.10 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex