The German bunds traded modestly firmer Monday after recent data showed that the country’s retail sales plummeted during the month of September.
We would expect the yields to stay in the range of 0.10-0.20 percent in the short-term, with an upward break likely eventually but not imminently.
The yield on the benchmark 10-year bond, which moves inversely to its price fell 1 basis point to 0.156 percent, the yield on long-term 30-year note dipped 1-1/2 basis points to 0.790 percent and the yield on short-term 2-year bond slid 1 basis point to -0.627 percent by 08:40 GMT.
Retail sales in Germany plummeted during the month of September, while private consumption remained robust during the period; this indicated a possible sign that terrorism concerns and global economic uncertainties have started to undermine household consumption in Europe's largest economy.
Germany’s retail sales, adjusted for inflation and seasonal swings, dropped 1.4 percent in September from August, their sharpest fall in two years, data released by the country’s statistics agency, Destatis showed Monday. Economists polled by Reuters had forecast a 0.2 percent gain.
However, compared with September last year, retail sales were up 0.4 percent, in inflation-adjusted terms, undershooting the Reuters consensus forecast of a 1.6 percent increase. The monthly figure for August was revised up to a fall of 0.3 percent from a previously reported dip of 0.4 percent.
Moreover, the German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Crude oil prices fell amid signs of deadlock at a technical OPEC meeting in Vienna as the cartel tries to work out an implementation framework for an output reduction deal agreed in September. The International benchmark Brent futures fell 0.04 percent to $50.66 and West Texas Intermediate (WTI) dipped 0.23 percent to $48.59 by 08:50 GMT.
Meanwhile, the German stock index DAX Index traded 0.35 percent lower at 10,658.75 by 08:50 GMT.
