German Bund yields soar on Draghi comments

Investing.com - German bond yields spiked on Wednesday, as investors digested comments made by European Central Bank President Mario Draghi.

Yields on German 10-Year Bunds surged 8.0 basis points, or 11.48%, to hit 0.776% during U.S. morning hours, after rising to an intraday peak of 0.781%, the most since May 7.

European Central Bank President Mario Draghi reiterated that the bank's €60 billion monthly bond buying program is set to run until September 2016 or until inflation is on a sustained path to 2%.

The ECB said it was becoming more upbeat about its inflation outlook for 2015, with quarterly staff projections rising to 0.3%, up from the March forecast for a flat reading.

"Our monetary policy measures have contributed to a broad-based easing in financial conditions, a recovery in inflation expectations and more favorable borrowing conditions for firms and households," Draghi said.

The comments came at a press conference after the ECB held its benchmark interest rate at a record-low 0.05%. The central bank also kept its marginal lending at 0.30% and left its deposit facility rate unchanged at -0.20%.

Elsewhere, in the U.S., the yield on 10-Year Treasurys advanced 3.9 basis points, or 1.73%, to hit 2.305%, the highest level since May 12.

The Commerce Department said that the U.S. trade deficit narrowed by 19.2% in April to $40.88 billion from a deficit of $50.57 billion in March. Analysts had expected the U.S. trade deficit to narrow to $44.0 billion in April.

The report came after payroll processing firm ADP said non-farm private employment rose by 201,000 in May, just above expectations for an increase of 200,000. The economy created 165,000 jobs in April.

The upbeat data raised hopes that the economy was regaining strength after contracting in the first quarter, fuelling speculation that the Federal Reserve could raise rates as soon as September.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.4% at 96.37, moving off a more than one-week low of 95.69 hit overnight.