German bunds trade nearly flat ahead of 30-year auction, ECB’s policy decision also in focus

The German bunds traded nearly flat Tuesday ahead of the super-long 30-year note auction. Also, investors await the European Central Bank monetary policy decision for further market directions scheduled to be released October 20.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 0.06 percent mark, the yield on long-term 30-year note remained steady at 0.68 percent and the yield on short-term 2-year bond climbed 1 basis point to -0.65 percent by 08:50 GMT.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Crude oil prices clawed back minor gains in early Asia trade Tuesday following an overnight decline but trading is expected to be muted now that the market has priced in a potential production cut. The International benchmark Brent futures rose 0.70 percent to $51.88 and West Texas Intermediate (WTI) jumped 0.92 percent to $50.40 by 09:00 GMT.

Moreover, the European Central Bank (ECB) is scheduled release its monetary policy decision on Thursday, 20th October and we foresee that the central bank to keep policy steady and wait until December to unveil a possible extension and tweaks its Quantitative Easing programme. Additionally, President Mario Draghi's presser will be scrutinized closely as investors assess both the scope for further easing and eventual tapering.

Lastly, investors will remain keen to focus on the upcoming ECB President Draghi speech, German 30-year bund auction and ECB monetary policy decision.

Meanwhile, the German stock index DAX Index traded 1.11 percent higher at 10,622 by 9:00 GMT.