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German bunds trade sideways after Eurozone CPI matches estimates; German 30-year auction in focus

The German government bunds traded sideways Monday, after reading the unchanged consumer price inflation index of Eurozone for the month of August, which matched market estimates as well. Also, investors are closely eyeing the country’s super-long 3-year auction, scheduled to be held on September 20 by 09:40GMT for further direction in the debt market.

The German 10-year bond yields, which moves inversely to its price, hovered around 0.43 percent, the yield on 30-year note flat at 1.23 percent and the yield on short-term 2-year traded 1 basis point lower at -0.70 percent by 09:20GMT.

Euro zone headline inflation hit its highest level in four months in August, official data showed on Monday, confirming the European Union statistics office's earlier flash estimate. According to data released by the Eurostat, consumer prices in the 19 countries sharing the euro rose in August by 1.5 percent year-on-year and by 0.3 percent on the month, in line with the average forecast of economists polled by Reuters. However, inflation remained below the European Central Bank's target of near 2 percent but picked up from 1.3 percent in July.

Politics-wise, Germany’s general election will be held on Sunday, with Angela Merkel seemingly set on a clear path back to be Chancellor for a fourth term. The only question seems to be whether she’ll eventually heading up another grand coalition with the main opposition SPD remaining in the passenger seat, a ‘Jamaica’ coalition with the liberal Free Democrats and Greens in tow, or – perhaps most likely – leading a minority CDU/CSU government while picking and choosing which parties to make deals with on an ad hoc basis.

Meanwhile, the German DAX traded 0.10 percent higher at 12,587.50 by 09:35 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 61.16 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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