The German bunds climbed on Friday as investors poured into safe-haven instruments amid losses in riskier assets including crude oil and stocks. Also, investors were cautious ahead of Federal Reserve Chair Janet Yellen's speech that is likely to clear the air on Fed's stance on interest rate hike. The yield on the benchmark 10-year bonds, which moves inversely to its price fell 2 basis points to 0.126 pct by 0835 GMT.
The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices fell more than 1 percent to below $50 mark after investors booked profit, as they considered whether higher prices could unlock more output in an already oversupplied market. Yesterday, crude oil prices crossed $50 mark for first time in seven months after the U.S. government reported a larger-than-expected drop in crude inventories. According to the US DOE, crude inventories decreased 4.2 million barrels, as compared to a build of +1.3 million barrels seen prior for the week ending 20 May. This came alongside an increase seen in gasoline inventories of +2.0 million barrels, from a draw of -2.5 million barrels seen prior and a decrease in distillate inventories of -1.3 million barrels, against a draw of -3.2 million barrels. The International benchmark Brent futures fell 1.35 pct to $48.92 and West Texas Intermediate (WTI) dipped 0.63 pct to $49.17 by 0830 GMT.
The markets will now focus on next week’s May consumer inflation on Monday (1200 GMT), April Retails sale (0600 GMT), May unemployment change (0755 GMT), Euro zone May CPI (0900 GMT) on Tuesday, May Manufacturing PMI (0755 GMT) on Wednesday and European Central Bank ECB) June interest rate decision on Thursday (1145 GMT).
Meanwhile, the German stock index DAX Index fell 0.18 percent at 10,225 on tumbling crude prices by 0835 GMT.
The material has been provided by InstaForex Company – www.instaforex.com