German bunds nearly steady after Ifo business climate beats market expectations; ECB’s interest rate decision in focus

The German bunds remained nearly stable during European session Wednesday after the country’s Ifo business climate index for the month of July beat market expectations, albeit remaining an inch lower than the previous reading in June. Investors will now focus on the European Central Bank’s (ECB) monetary policy decision, due to be unveiled on July 26 by 11:45GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, remained tad lower at 0.39 percent, the yield on 30-year note slipped 1/2 basis point to 1.04 percent and the yield on short-term 2-year remained nearly flat at -0.61 percent by 09:35GMT.

Germany’s Munich-based Ifo economic institute said its business climate index, based on a monthly survey of companies, ticked down to 101.7 from 101.8 in June. However, the reading was slightly better than economists’ expectations for 101.6. Further, the country’s business assessment index edged up to 105.3 from 105.1, compared to expectations for 104.8.

With European Commission President Juncker meeting United States President Donald Trump later today, the focus will be on the trade policy discussion, in particular, US threats to impose import tariffs on European cars. Juncker is expected to attempt to diffuse tensions by either offering to pursue a plurilateral lowering of car import tariffs among major producers or engage in talks for a EU-US trade deal focused on industrial tariffs, Daiwa Capital Markets reported.

Meanwhile, the German DAX jumped 0.22 percent to 12,661.73 by 09:45GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -65.46 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex