German bunds jump after October CPI remains steady; Q3 GDP in focus

The German bunds jumped during European trading session Wednesday after the country’s consumer price inflation (CPI) for the month of October remained steady, with eyes still on Germany’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released on November 14 by 07:00GMT, will provide further insight into the debt market.

The German 10-year bond yield, which move inversely to its price, slumped nearly 4 basis points to -0.282 percent, the yield on 30-year note plunged 5 basis points to 0.208 percent and the yield on short-term 2-year slipped 1-1/2 basis points to -0.639 percent by 10:15GMT.

This morning has already seen the release of final German inflation figures for October, which offered no surprises. In particular, the headline EU-harmonised CPI rate aligned with the flash estimate of 0.9 percent y/y, unchanged from September at a near-three-year low, Daiwa Capital Markets reported.

Within the detail, energy inflation remained the main source of downward pressure in October, down 1ppt to -2.1 percent y/y, the lowest since 2016. While non-energy industrial goods inflation moved sideways at 0.9 percent y/y last month (the lowest since March), services inflation edged higher by 0.1ppt to 1.3 percent y/y, the report added.

As such, core CPI increased slightly by 0.1ppt to 1.1 percent y/y, nevertheless still weak compared with the start of the year and suggestive of still very subdued underlying inflationary pressures, Daiwa further noted in the report.

Meanwhile, the German DAX edged nearly 1 percent down to 13,175.37 by 10:20GMT.