European Bonds Climb on Doha Worries, Chinese Slowdown
The European bonds gained on Friday as angst rose among investors about the Doha talks and slowdown in Chinese Q1 GDP figure. The benchmark German 10-year bonds yield, which is inversely proportional to bond price fell 14.63 pct to 0.140 pct, French 10-year bunds yield dipped 4.72 pct to 0.489 pct, Italian equivalents tumbled 0.38 pct to 1.346 pct, Netherlands 10-year bonds yield inched down 6.25 pct to 0.360 pct, Portuguese 10-year bonds yield dipped 1.33 pct to 3.042 pct and United Kingdom 10-year Gilts yield fell 1.72 pct to 1.429 pct by 1300 GMT.
China’s Q1 GDP rose to 6.7 pct y/y, trending in the line of market expectation (6.7 pct y/y), as compared to 6.8 pct in the previous quarter. Individually, growth in primary, secondary and tertiary sector slowed down to 2.9 pct y/y, 5.8 pct y/y and 7.6 pct y/y, from 3.9 pct y/y, 6.0 pct y/y and 8.3 pct y/y, respectively. Moreover, March Industrial production figures jumped to 6.8 pct y/y, higher than the market consensus of 5.9 pct y/y, as compared to 5.4 pct in the February. The March retail sales also climbed 10.5 pct y/y, more than the market expectation of 10.4 pct y/y, from 10.2 pct in February.
The officials from oil rich countries are expected to meet on Sunday, 17th April at Doha, Qatar to conclude a freeze on the levels of crude oil productions.
But, the Brent crude oil futures are hovering around $43.00 mark, down from early high of $44.50 after Iran’s oil minister said on Wednesday that he will not attend the Doha oil talks at the weekend but an Iranian representative will be there, underscoring the growing mixed views that key oil producers could agree on a production freeze this Sunday.
The European bonds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures fell 2.24 pct to $42.87 and West Texas Intermediate (WTI) tumbled 2.41 pct to $40.50 by 1300 GMT.
We foresee that if Doha meet fails to implement the expected, crude oil prices will tumble, pushing bond prices further up.
The material has been provided by InstaForex Company - www.instaforex.com