German bunds tad down after Q3 GDP beats consensus estimates, October CPI remains flat

The German bunds slipped Tuesday after the country’s gross domestic product (GDP) for the third quarter of this year beat market expectations, rising from that in the second-quarter. Also, consumer price-led inflation index (CPI) remained flat during the month of October, which added further sluggishness to the debt market.

The German 10-year bond yields, which move inversely to its price, remained tad higher at 0.42 percent, the yield on 30-year note hovered around 1.31 percent and the yield on short-term 2-year traded nearly 1/2 basis point higher at -0.74 percent by 08:50GMT.

The German economy expanded in Q3 at a surprisingly quick pace of 0.8 percent on Q2 (consensus: 0.6 percent). The strength of the upswing is also reflected in that a second spring seems to be on the cards for investment in machinery and equipment despite the recent fall in profit margins. The German economy will likely continue growing strongly for two or three years, even with undesirable developments increasingly unfolding beneath the surface.

The annual inflation rate fell to 1.5 percent from 1.8 percent in September, dropping further below the European Central Bank’s target of nearly 2 percent despite its unprecedented monetary stimulus program.

Meanwhile, the German DAX traded 0.23 percent up at 13,107.00 by 08:45 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 174.83 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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