German bunds sag following weakness in U.S. Treasuries; U.S. 10-year yields hit highest since July last year

The German bunds slumped Thursday, following the current rout in U.S. Treasuries as OPEC agreed to lower production at the ministerial gathering held in Vienna.

Also, the market now looks ahead to the ECB monetary policy meeting, which is scheduled to take place next week on December 8.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 2-1/2 basis points to 0.30 percent, the yield on long-term 30-year note jumped 3-1/2 basis points to 0.98 percent and the yield on short-term 3-year bond inched 1/2 basis point to -0.73 percent by 09:10 GMT.

The German bunds have been closely following developments in the U.S. debt market. The United States benchmark 10-year Treasury yield climbed 4-1/2 basis points to 2.41 percent post-OPEC deal, hitting highest since July 2015.

Crude oil prices rallied after OPEC agreed to output cuts in OPEC ministerial gathering at Vienna yesterday. The International benchmark Brent futures rose 1.10 percent to $52.41 and West Texas Intermediate (WTI) jumped 1.05 percent to $49.96 by 05:30 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by roughly 1.2 Mb/d to 32.5, which equates to a 4.5-4.6 percent cut per member country. We believe the outcome is consistent with our view of what OPEC production levels were expected to be in 2017 irrespective of the deal reached yesterday, reported Barclays in its research note.

In other words, the meeting is highly unlikely to substantially affect the oil market balance.  Compared with our assessment of OPEC supply last month, we have adjusted our first-quarter of 2017 production estimate lower by 350 kb/d, which will result in a slightly steeper draw than our balances were forecasting, they added.

The European Central Bank is expected to keep its interest rate unchanged as the Eurozone inflation hit a 31-month high in November, data showed on Wednesday. Eurozone consumer prices rose 0.6 percent y/y in November from 0.5 percent a month earlier, the Eurostat data showed, in line with analysts' expectations and the highest reading since April 2014.

Meanwhile, the German stock index DAX Index traded 0.80 percent lower at 10,556 by 09:20 GMT. While at 09:00 GMT, the FxWirePro's Hourly Euro Strength Index stood neutral at -12.86 (lower than -75 represents bearish trend).