German bunds tad lower ahead of ECB’s monetary policy decision, March CPI data

The German bunds remained tad lower during European trading session Wednesday ahead of the European Central Bank’s (ECB) monetary policy meeting, scheduled to be held today by 11:45GMT, besides, the country’s consumer price inflation (CPI) data for the month of May, due for release on April 11 by 06:00GMT, which shall provide further direction to the debt market.

The German 10-year bond yields, which move inversely to its price, traded hardly higher at -0.001 percent, the yield on 30-year note remained tad higher at 0.635 percent and the yield on short-term 2-year traded flat at -0.573 percent by 10:00GMT.

The main event in the euro area today will be the conclusion of the latest ECB policy meeting. The previous meeting in March saw the ECB revise down significantly its forecasts for GDP and inflation.

And so, the Governing Council amended its forward guidance to make clear that its key interest rates are expected “to remain at their present levels at least through the end of 2019”. And it also confirmed its intention to hold a new round of quarterly targeted long-term refinancing operations (TLTRO-III), starting in September 2019 and ending in March 2021, Daiwa Capital Markets reported.

The maturity of each operation will be two years, half that of the previous TLTRO-II programme, while counterparties will be entitled to borrow up to 30 percent of the stock of eligible loans as at February 28, 2019 at a rate indexed to the refi rate over the life of each operation. Other precise details of the TLTROs‑III, including the incentives for credit conditions to remain favourable, were to be announced in due course, the report added.

Meanwhile, the German DAX rose 0.47 percent to 11,906.05 by 10:10GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 105.91 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex