German bunds trade steady after September CPI remains flat m/m, unchanged y/y

The German bunds remained steady during European session of the last trading day of the week Friday following a flat reading of the country’s consumer price inflation (CPI) for the month of September month-on-month, while rising 1.2 percent y/y, albeit unchanged from the prior reading.

The German 10-year bond yield, which move inversely to its price, hovered around -0.479 percent, the yield on 30-year note remained tad higher at -0.010 percent and the yield on short-term 2-year remained flat at -0.712 percent by 10:05GMT.

A relatively quiet day for euro area economic news has this morning seen the release of final German and Spain inflation figures for September. These provided no surprises, e.g. with headline German CPI on the EU-harmonised measure aligning with the flash estimate showing a decline of 0.1ppt to 0.9 percent y/y, the lowest since November 2016, Daiwa Capital Markets reported.

The downward pressure principally reflected weaker energy price inflation, which posted the first negative reading since mid-2017, while food inflation also moderated. But while non-energy industrial goods inflation also slipped back to a six-month low (down 0.2ppt to 0.9 percent y/y), services inflation ticked higher (up 0.5ppt to 1.2 percent y/y), the report added.

As such, core inflation took a step up in September, up 0.2ppt to 1.0 percent y/y, nevertheless remaining below the average of the past two years and suggesting still very subdued underlying inflationary pressures, Daiwa further reported.

Meanwhile, the German DAX jumped 2 percent to 12,403.02 by 10:15GMT.