German bunds plunge on mixed PMIs; Q2 GDP data eyed

The German bunds plunged Tuesday after data showed mixed reading for German and Eurozone PMIs figure. The yield on the benchmark 10-year bond rose 1 basis point to -0.078 percent, the yield on long-term 30-year note also jumped 1 basis point to 0.419 percent and the yield on short-term 3-year bond bounced ½ basis point to -0.634 percent by 09:00 GMT.

Germany Markit flash August manufacturing PMI came at 53.6, in the line of market expectations, from 53.8 in July. Moreover, the flash Eurozone sectoral PMIs reveal mixed readings, with the manufacturing PMI falling to 51.8 from 52.0 in July, undershooting expectations of 52.0, whilst the services PMI rises to 53.1, from 52.9 and exceeds the 52.8 market consensus.

As such the composite PMI, which is key for the direction of GDP growth, hardens marginally, to 53.3 from 53.2, also outperforming central expectations of 53.1. This confirms that activity in the Eurozone as a whole continues to proceed at a slightly faster pace, and has not as yet been significantly affected by the UK's vote to leave EU.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The crude oil prices declined more than 3 percent as Iraq prepared to increase its exports and renewed concerns that upcoming producer talks will not rein in oversupply.

Also, worries about expanding Chinese fuel exports dragged oil prices. The International benchmark Brent futures fell 1 percent to $48.67 and West Texas Intermediate (WTI) dipped 1.27 percent to $46.81 by 09:00 GMT.

Lastly, investors will remain keen to focus on the upcoming economic data, highlighted by Q2 GDP, Business expectations, Ifo Business Climate and GfK German consumer climate.

Meanwhile, the German stock index DAX Index traded 0.74 percent higher at 10,569.50 by 09:00 GMT.