German bunds slump as dihk raises GDP growth forecast; markets await ECB policy decision

The German bunds slumped Thursday after Chambers of Commerce (DIHK) raised economic growth forecast for 2016. Also, investors now await the European Central Bank’s monetary policy decision for future market directions, which is scheduled to be released on October 20.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 2 basis points to 0.04 percent, the yield on long-term 30-year note also climbed 2 basis points to 0.66 percent and the yield on short-term 2-year bond bounced 1 basis point to -0.65 percent by 09:30 GMT.

German Chambers of Commerce (DIHK) raised 2016 GDP growth forecast of Europe’s largest economy to 1.9 percent, up from previous 1.5 percent, and 1.2 percent for 2017. DIHK cited rising oil prices and sluggish global growth as factors for the fall in expectations, which was leading to a drop of confidence in all branches of the economy, Reuters reported.

Moreover, the European Central Bank (ECB) is scheduled release its monetary policy decision on Thursday, 20th October and we foresee that the central bank to keep policy steady and wait until December to unveil a possible extension and tweaks its Quantitative Easing programme. Additionally, President Mario Draghi’s presser will be scrutinized closely as investors assess both the scope for further easing and eventual tapering.

Meanwhile, the German stock index DAX Index traded 0.24 percent higher at 10,670 by 09:30 GMT.

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Author: fxinity

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