German bunds slip despite lower-than-expected February CPI; eyes on Eurozone inflation data

The German bunds slipped during European session Thursday after investors have largely shrugged-off the lower-than-expected reading of the country’s consumer price inflation (CPI) data for the month of February, released today. Now, Eurozone’s consumer price inflation (CPI) for similar month, due tomorrow, will add further direction to the debt markets.

The German 10-year bond yields, which move inversely to its price, rose nearly 1-1/2 basis points to 0.076 percent, the yield on 30-year note traded tad higher at 0.739 percent and the yield on short-term 2-year traded 1 basis point higher at -0.541 percent by 10:10GMT.

Ahead of tomorrow’s release of February’s final euro area inflation figures, this morning brought the equivalent reports from the largest two member states. In Germany, the EU harmonised figures aligned with the preliminary estimate, showing that prices rose 0.5 percent m/m in February to leave annual inflation unchanged at 1.7 percent y/y for the third consecutive month, Daiwa Capital Markets reported.

On the national measure, however, there was a modest upwards revision to the flash reading of headline CPI by 0.1ppt to 1.5 percent y/y, up from 1.4 percent y/y in January. Within the detail, energy price inflation accelerated in February (up 0.6ppt to 2.9 percent y/y), with the highest increase recorded for heating oil (14.2 percent y/y), while food price inflation also jumped (up 0.6ppt to 1.4 percent y/y), the report added.

And despite services inflation having moved sideways at 1.4 percent y/y, core inflation (on the national measure) also edged slightly higher in February, up 0.1ppt to 1.4 percent y/y, a four-month high.

Meanwhile, the German DAX remained tad higher at 11,583.78 by 10:15GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 9.41 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex