German bunds rally ahead of ECB President Draghi’s speech, November unemployment change

The German bunds rallied during European session Wednesday ahead of the European Central Bank’s (ECB) President Mario Draghi’s speech, scheduled to be held on November 29 by 14:00GMT, followed by the country’s unemployment change for the month of November, scheduled to be released on the same day by 08:55GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, fell nearly 1-1/2 basis points to 0.335 percent, the yield on 30-year note also slipped 1-1/2 basis points to 1.003 percent and the yield on short-term 2-year traded steady at -0.651 percent by 10:10GMT.

Downbeat expectations on economic growth appears to be the main driver of the softening in German consumer confidence, with the relevant index having fallen to 17.4, well down from the peak of 54.4 seen at the start of this year and around half of the average level over the last twelve months, Daiwa Capital Markets reported.

A more subdued economic outlook also prompted consumers to reassess their income expectations, which weakened for a second consecutive month to the lowest level since March 2017. Nevertheless, households’ propensity to buy seems to be holding up well – the relevant indicator rose for a second consecutive month and reached the highest level since 60 – perhaps thanks to still favourable labour market conditions.

Nevertheless, German consumers cut their spending in Q3 for the first quarter in almost five years. And, given the more downbeat tone to this survey, we do not expect a particularly vigorous rebound in consumption in Q4, the report added.

Meanwhile, the German DAX remained 0.15 percent higher at 11,318.02 by 10:20GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -62.69 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex