The German bunds plunged on Wednesday as investors cooled on safe-haven instruments amid gains in riskier assets including crude oil and equities. Also, higher than expected consumer sentiment and business climate index shifted investors from safe-haven buying. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 2bps to 0.192 pct by 0815 GMT.
The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Today, Crude oil tumbled more than 1 percent and pushed closer to $50 a barrel, hitting its highest in over seven months after industry data suggested a larger-than-expected drawdown in U.S. crude inventories last week. American Petroleum Institute inventory data showed crude oil dropped by 5.14 million barrels. Moreover, gasoline stocks climbed by 3.6 million barrels, while inventories of distillate fuels, including diesel and heating oil, fell by 2.9 million barrels. The International benchmark Brent futures rose 1.38 pct to $49.28 and West Texas Intermediate (WTI) jumped 1.32 pct to $49.26 by 0815 GMT.
In addition, German GfK consumer sentiment index rose to 9.8 heading into June, against market expectations for 9.7, unchanged from previous 9.7. Moreover, the Germany's IFO Business Climate index for May rose to 107.7 (highest since December), more than the markets consensus of 106.8. Both the current assessment and expectations components improved, the former to a 9-month high.
Meanwhile, the German stock index DAX Index rose 1.08 pct at 10,166 on rallying crude prices by 0815 GMT.
The material has been provided by InstaForex Company – www.instaforex.com