The German bunds traded modestly firmer Wednesday as investors remained cautious ahead of the 10-year auction. Also, lower than expected manufacturing PMI for November drove investors towards safe-haven buying.
The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 0.21 percent, the yield on long-term 30-year note dipped 1/2 basis point to 0.86 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.74 percent by 09:10 GMT.
We foresee that the 10-year German yield to hover in the range of 0.20-0.40 percent over next couple of weeks.
The Germany’s manufacturing PMI dipped to 54.4 in November, lower than the market expectations of 54.8, from 55 in October. But, we expect that the manufacturing PMI has been on a steady rise since August and even after a fall this result points to a relatively healthy economy.
ECB President Draghi, speaking to the European Parliament, said that monetary support is needed to hit the European Central Bank's inflation target, even as monetary policy needs 'decisive' support from other actors.
On Monday, Chancellor Merkel of Germany has announced that she likes being chancellor and she would like to carry on being one if that is alright with everyone. There had been a little uncertainty in the markets about whether she would be a candidate in next year's election, reported UBS in its morning note.
Meanwhile, the German stock index DAX Index traded 0.06 percent lower at 10,707.50 by 09:10 GMT. While at 09:00 GMT, the FxWirePro's Hourly Euro Strength Index stood neutral at -48.75 (lower than -75 represents bearish trend).
