German bunds plunge on higher risk appetite; 10-year yield hits highest since May

The German bunds traded plunged Tuesday as investors moved away from safe-haven buying amid gains in crude oil prices and the recovery in equities market. Also, the yields on 10-year bonds hit highest since May.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 3-1/2 basis point to 0.205 percent, the yield on long-term 30-year note also jumped 3-1/2 basis points to 0.826 percent and the yield on short-term 2-year bond bounced 1/2 basis point to -0.613 percent by 09:10 GMT.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Crude oil prices rose fresh investors buying after crude oil prices fell below $50 mark. The International benchmark Brent futures rose 0.56 percent to $48.88 and West Texas Intermediate (WTI) climbed 0.21 percent to $46.96 by 09:20 GMT.

According to Reuters, German government bond yields recorded their biggest monthly rise since 2013 on Monday, as investors reassess the outlook for monetary policy against a backdrop of brighter economic data. Benchmark 10-year Bund yields edged back from near six-month peaks hit on Friday, as news that the Federal Bureau of Investigation is examining more emails in an inquiry into Hillary Clinton's use of a private server lent support to safe-haven bonds before next week's U.S. presidential election.

Meanwhile, the German stock index DAX Index traded 0.10 percent lower at 10,651 by 09:20 GMT.