German bunds flat in subdued trade, likely to gain on weak crude

The German bunds traded nearly flat on Monday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year bond hovered around -0.11 percent mark, the yield on long-term 30-year note remained steady at 0.34 percent and the yield on short-term 2-year note stood unchanged -0.62 percent by 09:30 GMT.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The crude oil prices fell more than 1 percent with increases in OPEC production and US oil rig additions continued to weigh on the market. The International benchmark Brent futures fell 1.33 percent to $42.95 and West Texas Intermediate (WTI) tumbled 1.18 percent to $41.11 by 09:40 GMT.

In terms of economic data release, the Eurozone manufacturing PMI rose to 52.0 in July, although it's marginally higher than the market consensus prediction of an unchanged reading of 51.9, from a flash print of 51.9. This still keeps it lower than its 52.8 reading in June though, and it is also lower than its 52.4 reading in Jul 2015.

Investors will remain keen to focus on the upcoming economic data, highlighted by trade balance, Q2 GDP and consumer inflation.

Meanwhile, the German stock index DAX Index trading 0.45 percent higher at 10,384 by 09:50 GMT.