German bunds fall despite lower-than-expected May ZEW economic sentiment; Q1 GDP closely eyed

The German bunds fell during European trading session Tuesday after investors have largely shrugged-off the lower-than-expected ZEW economic sentiment for the month of May, while markets will be keeping a close eye on the country’s gross domestic product (GDP), scheduled to be released on May 15 by 06:00GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, rose nearly 1-1/2 basis points to -0.062 percent, the yield on 30-year note also edged 1-1/2 basis points higher to 0.583 percent while the yield on short-term 2-year traded flat at -0.637 percent by 09:50GMT.

Germany’s ZEW research institute said its monthly survey showed economic sentiment among investors fell to -2.1 from 3.1 in April. Economists had expected an increase to 5.0. A separate gauge measuring investors’ assessment of the economy’s current conditions increased to 8.2 from 5.5 the previous month. Markets had predicted a rise to 6.0.

"The most recent escalation in the trade dispute between the United States and China again increases the uncertainty regarding German exports, a key factor for the growth of the gross domestic product," Reuters reported, citing ZEW President Achim Wambach.

Meanwhile, the German DAX traded tad 0.32 percent higher at 11,915.21 by 09:55GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 136.98 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex