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German bunds slump ahead of key ECB members’ speeches, Eurozone December trade balance

The German bunds slumped Thursday as investors wait to watch a host of speeches from key members of the European Central Bank, later today as well as tomorrow. Later this morning, the euro area’s December trade figures are expected to show that the headline trade surplus remained little changed at the end of the year at more than EUR22 billion, one of the highest levels of 2017, on the back of robust export growth.

The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to 0.78 percent, the yield on 30-year note surged 2 basis points to 1.41 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points higher at -0.49 percent by 08:30GMT.

According to data released this morning, conditions in the French labor market continued to improve significantly at the end of last year. Following a small increase in Q3, the French unemployment rate declined a whopping 0.7ppt in Q4 to 8.9 percent, the lowest level since early 2009, taking the drop over the course of 2017 to 1.1ppt to represent the best year since the financial crisis.

The detail of the Q4 figures was even more encouraging, with big falls in joblessness of all age groups, including youth unemployment, and a very significant decline in the long-term unemployment rate to 3.6 percent, the lowest in almost six years.

Moreover, the drop in unemployment was due to the rising employment rate, which rose 0.6ppt to 65.7 percent, the highest level since the early 1980s. With the economy continuing to grow at a rate above its potential and Macron’s reforms seemingly having generated the necessary confidence among businesses to encourage them up their recruitment plans, the current trajectory in the French labor market looks set to be maintained this year.

Meanwhile, the German DAX fell 0.65 percent to 12,421.16 by 08:40GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 69.42 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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