German bunds plunge as investors await August trade balance, September CPI data

The German bunds plunged during European session Wednesday as investors await the country’s trade balance data for the month of August, scheduled to be released on October 10 by 06:00GMT and the consumer price inflation (CPI) for the month of September, due for release on the following day by 06:00GMT for further direction in the debt market.

The German 10-year bond yield, which move inversely to its price, jumped 3 basis points to -0.566 percent, the yield on 30-year note surged 4 basis points to -0.071 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.757 percent by 10:40GMT.

Consistent with the September PMIs, today’s Bank of France business sentiment survey signalled a loss of momentum at the end of the third quarter, particularly in the manufacturing sector, Daiwa Capital Markets reported.

Indeed, the headline index fell 3pts to 96, reflecting a drop in production that month, particularly in the manufacturing of machinery and electronic equipment. Nevertheless, with order books having improved slightly manufacturers anticipated a pickup in production in October.

And on average over the third quarter as a whole, the manufacturing sentiment index was only ½pt lower than the Q2 average. In the survey, services firms also suggested that activity slowed slightly in September, although the headline index at 99 remained close to the long-run average and still left the quarterly index unchanged from Q2 at 100, the report added.

And construction firms were a touch more upbeat about recent conditions in the sector, with the respective headline index rising 1pt to 105, a four-month high, Daiwa further noted in the report.

Meanwhile, the German DAX traded over 1.00 percent up at 12,090.96 by 10:45GMT.