German bunds sink on better unemployment rate; weaker-than-expected Eurozone CPI limits fall

The German bunds sunk Wednesday, after witnessing a fall in the country’s unemployment rate for the month of May, released today. However, a weaker-than-expected consumer price inflation in the Eurozone for May has cushioned deeper falls in the bond prices.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 0.30 percent, the long-term 30-year bond yields rose 1 basis point to 1.15 percent while the yield on the short-term 2-year bond traded nearly 1/2 basis point higher at -0.70 percent by 09:10 GMT.

German Bunds retained a firm tone in European trade as recent comments by European Central Bank (ECB) President Mario Draghi suggesting that the central bank is not in a hurry to wind down its monetary stimulus, are still in investors’ ears.

Further, according to data from the Federal Labour Office, the country’s unemployment rate for the month of May edged down to 5.7 percent from 5.8 percent, remaining at its lowest level since German reunification in 1990. Economists polled by Reuters had expected it to hold steady.

Lastly, the European Union's statistics agency said that Eurozone’s consumer prices were 1.4 percent higher in May than a year earlier, although a decline in the inflation rate from 1.9 percent in April, when it was in line with the ECB's target. That is the lowest inflation rate recorded this year, and below the 1.5 percent forecast by economists.

Meanwhile, the German stock index DAX Index rose 0.07 percent to 12,608.50 by 09:30 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -102.39 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex