The German bunds gained on Wednesday as investors poured into safe-haven instruments amid losses in riskier assets including crude oil and stocks. The yield on the benchmark 10-year bonds, which moves inversely to its price fell 1 basis point to 0.135 percent 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 UAE Oil Minister Suhail Mohammed Al Mazrouei said the market will fix itself to a fair price for consumers and producers, adding that the rules of supply and demand are working. The remarks pour cold water on the probability that OPEC will agree to an output freeze to buoy prices. The International benchmark Brent futures fell 1.04 percent to $49.37 and West Texas Intermediate (WTI) dipped 1 percent to $48.60 by 07:10 GMT.
Moreover, a new UK referendum poll finds those wanting to “Leave” the EU ahead of the “Remain” camp by 45-42 percent. This ICM/Guardian poll was by telephone — whereas most phone polls have found the Remain camp well in the lead. The same organisation's simultaneous online poll also showed a similar pro-Leave lead of 47-44 percent.
Yesterday, the German unemployment declined by 11k in May, consensus was for -5k fall, as compared to -16k previously, with the claimant count u/e rate dipping unexpectedly to 6.1%. Seasonally adjusted number of people seeking work dropped below 2.7 million for the first time ever since German reunification in 1991. In addition, the pan-German preliminary May HICP inflation rate climbed more than expected, to 0.0 percent y/y, vs the consensus of -0.1 percent and -0.3 percent the previous month.
The markets will now focus on European Central Bank (ECB) June interest rate decision on Thursday (1145 GMT). Meanwhile, the German stock index DAX Index dipped 0.43 percent at 10,220 by 0835 GMT.
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