German bunds disappoint despite lower-than-expected June industrial production, trade balance data

The German bunds disappointed during European session Tuesday as investors have largely shrugged-off the lower-than-expected industrial production and trade balance data for the month of June amid an otherwise, silent trading session.

The German 10-year bond yields, which move inversely to its price, rose 1 basis point to 0.40 percent, the yield on 30-year note also climbed 1 basis point to 1.04 percent and the yield on short-term 2-year traded flat at -0.57 percent by 09:35GMT.

The total industrial production, which include construction activity, was down by 0.9 percent m/m, while manufacturing output shrank at a similar rate. It is worth noting, however, that the weakness at the end of Q2 followed a sharp rise in May, and so over the quarter as a whole German industrial production was still up by 0.4 percent 3m/3m, up from just 0.1 percent 3m/3m in Q1.

Further, German goods exports followed a similar pattern: after a decent increase in May, they were unchanged in June. And with imports up for a third month in a row, this time by 0.7 percent m/m, the trade surplus declined to EUR19.3 billion (seasonally-adjusted basis), the joint lowest level since the start of 2017.

Over Q2 as a whole, the German trade surplus has eased by EUR3.5 billion, signaling that the national accounts data for that quarter will probably show very weak net exports. Meanwhile, France also reported its latest trade figures this morning. In June, its trade deficit rose to EUR6.2 billion, the highest since the start of 2017.

Meanwhile, the German DAX rose 0.87 percent to 12,707.47 by 09:40GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -37.44 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex