German bunds jump ahead of July manufacturing PMI, ECB’s policy meeting

The German bunds jumped during European session Monday ahead of the country’s manufacturing PMI for the month of July, scheduled to be released on July 24 by 07:30GMT and the European Central Bank’s (ECB) monetary policy meeting, due to be held on the following day by 11:45GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to -0.338 percent, the yield on 30-year note suffered 1-1/2 basis points to 0.260 percent and the yield on short-term 2-year traded nearly 1 basis point down at -0.779 percent by 09:35GMT.

At June’s post-meeting press conference, ECB President Mario Draghi had stated that the Governing Council “is determined to act in case of adverse contingencies”. The account of that meeting added that there had been “broad agreement” that the “Governing Council needed to be ready and prepared to ease the monetary policy stance further by adjusting all of its instruments, as appropriate”, Daiwa Capital Markets reported.

But recent comments from Governing Council members have left it uncertain whether they judge that the preconditions for easing policy this month have been met. Indeed, recent economic data – from the euro area and certain other major economies – have been mixed and difficult to interpret with confidence, the report added.

"And as last month’s forward guidance did not explicitly flag the near-term possibility of a rate cut, we think the policymakers will want to wait for September before deciding what to do. Assuming they wait until then, they would also be able to calibrate precisely their policy response with updated economic forecasts that better reflect recent events," Daiwa further commented.

Meanwhile, the German DAX traded tad 0.22 percent higher at 12,285.14 by 09:40GMT.