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German bunds plunge after December trade surplus exceeds market expectations; investors eye ECB members’ speeches

The German bunds plunged during the mid-European session Thursday after the country’s trade surplus for the month of December exceeded market expectations, as investors keep a close eye on a host of speeches by European Central Bank (ECB) policymakers for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, jumped nearly 2-1/2 basis points to 0.75 percent, the yield on 30-year note surged nearly 2 basis points to 1.39 percent and the yield on short-term 2-year traded tad higher at -0.54 percent by 09:25GMT.

Given the weakness in manufacturing output reported for December, Germany’s trade figures for the same month had never looked particularly promising. And, indeed, this morning’s release confirmed a notable slowing of goods export growth, to 0.3 percent m/m from a steep rise of 4.1 percent m/m in November.

And so, while import growth also moderated (to 1.4 percent), the trade surplus narrowed from EUR22.3 billion in November, the largest in nineteen months on an adjusted basis, to EUR21.4 billion, still however above the average for the year. Nevertheless, in Q4 as a whole, exports rose 3.1 percent q/q, only slightly softer than imports (3.1 percent q/q) to suggest that net trade might have been broadly neutral from the perspective of GDP growth in Q4.

Meanwhile, the German DAX fell 0.76 percent to 12,492.11 by 09:25 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -133.11 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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February 20 21:00 UTC Released

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