The German bunds rallied Tuesday as investors pour into safe-haven assets amid tracking weak cues emerging from crude oil futures. Also, investors demand for German bunds were underpinned by weak China’s manufacturing PMI figure. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved down 2.55 pct to 0.268 pct and the yield on the 2-year bonds fell 2.13 pct to -0.480 pct by 0815 GMT.
The German bonds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices tumbled by snapping 6-month high as rising production in the Middle East outweighed a decline in U.S. output and a recent slide in the dollar, which has been supporting crude. OPEC supplies rose to 32.64 million barrels per day in April, from 32.47 million barrels per day in March, according to a Reuters survey. That almost matches January's 32.65 million barrel per day, when Indonesia's return to OPEC boosted production to the highest since at least 1997. The International benchmark Brent futures fell to $45.92, from yesterdays $46.77 and West Texas Intermediate (WTI) tumbled to $45.19, from yesterdays $45.51.
Today, China's Caixin manufacturing PMI fell to 49.4 in April from 49.7 in March, missing estimates for 49.8. On last Friday, the Germany March retail sales tumbled 1.1 pct m/m, against market expectation of 0.3 pct m/m rise, from down 0.4 pct in February. On annual basis, it rose tad 0.7 pct y/y, consensus was for 2.2 pct y/y, from prior 5.5 pct.
Meanwhile, the German stock index DAX Index fell 1.54 pct at 9,967 by 0815 GMT.
