German bunds suffer ahead of 5-year auction, ECB’s account of monetary policy meeting

The German bunds traded lower during afternoon session Monday ahead of the country’s 5-year auction, scheduled to be held on November 21 by 10:40GMT and the European Central Bank’s (ECB) account of monetary policy meeting, due on the following day by 12:30GMT.

Besides, Germany’s gross domestic product (GDP) for the third quarter of this year and November manufacturing PMI, both due by the end of this week, will add further direction to the debt market.

The German 10-year bond yields, which move inversely to its price, surged nearly 2-1/2 basis points to 0.396 percent, the yield on 30-year note also climbed 2-1/2 basis points to 1.061 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at -0.635 percent by 10:00GMT.

This week brings several releases of note from the euro area, including the ECB’s account from its October meeting (Thursday), the Commission’s latest Opinion on Italy’s budgetary plan (Wednesday) and November sentiment surveys.

In particular, while the Governing Council at the last meeting still considered risks to the outlook to be broadly balanced, it will be interesting to see to what extent discussions focussed on the recent weakening in the euro area data, while attention will also be on any further insight into the future monetary policy debate, including possible changes to the reinvestment policy to be agreed in December and options for another round of very long-term refinancing operations, Daiwa Capital Markets reported.

Meanwhile, the German DAX remained 0.08 percent higher at 11,350.2 by 10:05GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 116.69 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex