German bunds trade narrowly mixed after retail sales disappoint in September; October CPI in focus

The German bunds traded narrowly mixed Monday after the country’s retail sales for the month of September disappointed market participants, although registered higher figures than that in August. Also, the upcoming consumer price-led inflation index for the month of October, due today by 13:00GMT will remain the key focus for further direction in the debt market.  

The German 10-year bond yields, which move inversely to its price, traded flat at 0.38 percent, the yield on 30-year note slid nearly 1 basis point to 1.27 percent while the yield on short-term 2-year jumped nearly 2 basis points to -0.74 percent by 10:30GMT.

In terms of national data releases, flash German inflation figures for October are due today and expected to show a slight 0.1ppt drop in headline CPI on the EU measure to 1.7 percent y/y. The equivalent Spanish figures just released showed inflation unchanged, also at 1.7 percent y/y. Meanwhile, German retail sales figures, released this morning, showed a healthy rise of 0.5 percent m/m in September.

Tomorrow is also set to be busy for euro area data, bringing French Q3 GDP data and, most notably, the first estimate of euro area GDP last quarter too. In addition, the flash euro area inflation figures for October are also due tomorrow. Expectations are that the headline CPI rate will most likely remain unchanged at 1.5 percent y/y, but we see a possibility of a small rise in the core rate to 1.2 percent y/y.

Meanwhile, the German DAX traded flat at 13,222.25 by 10:35 GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -54.06 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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