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German bunds remain steady ahead of July manufacturing PMI, ECB’s policy meeting

The German bunds remained steady during European session Tuesday ahead of the country’s manufacturing PMI for the month of July, scheduled to be released on July 24 by 07:30GMT and the European Central Bank’s (ECB) monetary policy meeting, due to be held on the following day by 11:45GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, hovered around -0.342 percent, the yield on 30-year note remained tad higher at 0.260 percent and the yield on short-term 2-year too traded nearly flat at -0.763 percent by 10:10GMT.

Ahead of Thursday’s ECB policy announcement, today brings the first of this week’s sentiment surveys for July, with the flash estimate of the Commission’s euro area consumer confidence index. Having declined to a near-two year low in December, this indicator ticked a touch higher at the start of the year before oscillating around a broadly sideways trend, Daiwa Capital Markets reported.

And after slipping slightly in June, we expect only modest improvement in the July reading. Today will also bring the ECB’s latest quarterly Bank Lending Survey, the report added.

"And as last month’s forward guidance did not explicitly flag the near-term possibility of a rate cut, we think the policymakers will want to wait for September before deciding what to do. Assuming they wait until then, they would also be able to calibrate precisely their policy response with updated economic forecasts that better reflect recent events," Daiwa further commented.

Meanwhile, the German DAX traded 1.22 percent higher at 12,438.89 by 10:15GMT.

By Debarati Bir
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