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German bunds mixed in muted trading ahead of October manufacturing PMI, jobless rate

The German bunds remained mixed in a muted trading session as investors refrained from any amid lack of significant economic data. However, markets are now awaiting the release of the country’s manufacturing PMI for the month of October, due on November 2 by 08:55GMT. Also, Germany’s unemployment rate for the same month is due tomorrow, which will guide debt markets thoroughly.  

The German 10-year bond yields, which move inversely to its price, traded flat at 0.36 percent, the yield on the 30-year note climbed nearly 2 basis points to 1.24 percent while the yield on short-term 2-year traded nearly 1 basis point lower at -0.74 percent by 09:10GMT.

Yesterday’s top-tier data from the euro area maintained the recent trend, with a strong Q3 growth number (0.6 percent q/q), another drop in unemployment (to 8.9 percent last month), but also continued weakness of inflation, with declines in October to 1.4 percent on the headline measure and just 0.9 percent y/y on core CPI.

And while some temporary factors might have weighed on inflation last month and expect a modest rebound in November. Headline inflation is also expected to fall back to just 1.0 percent y/y at the start of 2018, and core inflation to remain close to 1.0 percent y/y over the coming twelve months. So, despite the broad-based economic growth momentum and continued solid job creation, these inflation figures illustrate perfectly why the ECB will continue with its net asset purchases throughout the whole of 2018 and is highly unlikely to raise interest rates until mid-2019 at the earliest.

Today is set to be a quiet day for economic data from the euro area, with national holidays for All Saints Day in several member states. So, most notable among the few releases will be manufacturing PMIs from the Netherlands, Ireland, and Greece, with all three set to be consistent with a decent pace of expansion.

Meanwhile, the German DAX jumped 1.26 percent to 13,396.50 by 09:20 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 0.79 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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