Bund yields retreat to lowest in three weeks, further downside is likely

German 10 year bund yield is trading at its lowest point in three weeks, suggesting that further downside remain open.

• German retail sales grew at solid pace of 1.7% in April, compared to March, however sales are only marginally higher by 1% compared to a year ago.
  
  
• Spanish economy, which is growing at higher than pre-crisis pace, showed little signs of improving inflation as of April. Spanish economy grew by 2.7% in the first quarter according to latest release, however preliminary reading for May showed HICP inflation at -0.3% compared to a year ago.
  
  
• Not all economy growing at break neck pace. While Growth robust in Spain and Ireland and stable in Germany, latest data showed Italy has little to cheer for. Economy grew by 0.1% in the first quarter.

All the evidence suggests, that recent rout in Euro zone bond market might have been overdone. Yields are likely to fall once more even if 10 year don't reach to negative territory. European Central bank (ECB) is still left with lot of asset purchase.

Bund CFD is currently trading at 155.17 and 10 year yield just about 0.52%.

Bund CFD likely to reach 159.5-160.25 area, if support at 151.7 holds. 152.7 can be used as interim support area.