German bunds marginally higher after Brent hits two-month low

The German bunds traded modestly firmer on Tuesday as crude oil prices hit its lowest since May following sluggish global demand and supply glut concerns. Also, investors remained cautious ahead of the United States Federal Reserve monetary policy decision followed by the press conference by Fed Chair Janet Yellen on Wednesday at 18:00 GMT.

The yield on the benchmark 10-year bond fell 1 basis point to -0.047 percent, the yield on long-term 30-year note dipped 2-1/2 basis points to 0.435 percent and the yield on short-term 2-year note also slid nearly 1 basis point to -0.608 percent by 09:30 GMT.

The 10-year German yield remained at the upper end of a -0.15-0.00 percent range, with risks on the upside due to more optimism about the US economy and diminishing fears about any severe Brexit spillover to the Eurozone.

In addition, the German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures fell 0.35 percent to $44.95 and West Texas Intermediate (WTI) tumbled 0.83 percent to $42.77 by 09:30 GMT.

Lastly, investors will remain keen to focus on the 30-year bond auction, unemployment rate, CPI and retail sales. Meanwhile, the German stock index DAX Index trading 0.12 percent higher at 10,210 by 09:30 GMT.