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German bunds mixed after improvement in Nov ZEW economic sentiment fails to create impact

The German bunds remained narrowly mixed during European trading session Tuesday after an improvement in the country’s ZEW economic sentiment data for the month of November failed to create any significant impact on debt markets.

The country’s gross domestic product (GDP) for the third quarter of this year, due to be released on November 14 by 07:00GMT, will provide further insight into the debt market.

The German 10-year bond yield, which move inversely to its price, traded flat at -0.242 percent, the yield on 30-year note gained 1-1/2 basis points to 0.272 percent and the yield on short-term 2-year slipped 1-1/2 basis points to -0.633 percent by 10:50GMT.

Germany’s ZEW business expectations rose markedly in November, from -22.8 to -2.1. While the global economy is expected to revitalise for the foreseeable future, a number of factors, such as the simmering trade dispute, will limit the recovery, Commerzbank reported.

This result is well above the consensus, which had only expected an increase to -13.0. The reasons for the much better assessment of business expectations are clear: the leading indicators appear to be stabilising, the report added.

"This means that optimism should be more subdued for the coming year. But first, the GDP figures for the third quarter due out next Thursday have to be digested. In our view, the German economy is expected to have shrunk slightly in the third quarter (Commerzbank: -0.1 percent; Consensus: 0.0 percent), which would meet the definition of a recession," Commerzbank further commented in the report.

Meanwhile, the German DAX edged tad 0.45 percent up to 13,258.59 by 11:00GMT.

By Debarati Bir
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