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German bunds mixed ahead of CPI data; unemployment remains at record low

The German bunds traded mixed on Thursday as investors awaited the consumer inflation data for July, which is scheduled to release on Thursday at 12:00 GMT.

The yield on the benchmark 10-year bond fell 1/2 basis point to -0.084 percent, the yield on long-term 30-year note dipped nearly 2 basis points to 0.377 percent and the yield on short-term 3-year note rose 1/2 basis point to -0.641 percent by 09:30 GMT.

German unemployment extended fall in July with a monthly seasonally-adjusted declined 7k, while markets were expecting a smaller 3k decline, as compared to 6k fall in the previous month.

The unemployment rate remained unchanged at a record low of 6.1 percent (this was the lowest since reunification in 1990), while on an ILO basis, the jobless rate stood flat at 4.2 percent.

In addition, the German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The crude oil prices hit its lowest since May following sluggish global demand and supply glut concerns.

Also, the EIA in its latest report mentioned that the US crude inventories climbed to a seasonally adjusted annual rate of 1.671 million barrels, the consensus was for a fall of -2.257 million barrels, as compared to -2.342 million barrels in the preceding month. The International benchmark Brent futures fell 0.64 percent to $43.59 and West Texas Intermediate (WTI) tumbled 0.19 percent to $41.84 by 09:40 GMT.

Moreover, the Federal Reserve Open Market Committee maintained a hawkish tone at the monetary policy meeting held Wednesday, while keeping the Federal Funds Rate unchanged. However, the Fed’s statement kept hopes alive for a rate cut in the future.

The central bank left the target range for the benchmark federal funds rate unchanged at 0.2-0.50 percent, a level since last December, when rates were hiked for the first time in seven years. The Fed mentioned that mounting risks to the US economy have subsided after the Brexit outcome and the labour market is showing signs of improvement.

The FOMC statement further mentioned that besides the job market, household spending has also started to improve and that economic activity has been expanding at a moderate rate; however, business conditions remain on a soft spree, the committee noted.

While, Fed Chairwoman Janet Yellen has repeatedly mentioned intentions of a gradual Fed rate hike, market volatility and the unexpected dip in job gains have upset the cause.

Meanwhile, the German stock index DAX Index trading 0.03 percent higher at 10,325 by 09:40 GMT.

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