German bunds witness sharp rebound on expectations of lower March manufacturing PMI

The German bunds witnessed a sharp rebound Wednesday, following expectations of a modest drop in the country’s manufacturing Purchasing Managers’ Index (PMI) from the month of March. Also, investors remain keen to watch the 10-year auction, scheduled to be held later today which will remain crucial in determining the future direction of the bond market.

The yield on the benchmark 10-year bond, which moves inversely to its price, slumped 3-1/2 basis points to 0.42 percent, the long-term 30-year bond yields plunged 5 basis points to 1.14 percent and the yield on short-term 2-year bond also traded 1-1/2 basis points lower at -0.74 percent by 08:30 GMT.

Germany's producer prices increased at the fastest pace in more than five years in February, figures from Destatis showed Monday. Producer prices advanced 3.1 percent in February from prior year, the fastest since December 2011, when prices gained 3.5 percent. Prices had climbed 2.4 percent in January.

The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures moved lower by 0.78 percent to USD50.59 and West Texas Intermediate (WTI) fell 0.44 percent to USD48.03 by 08:40 GMT.

Meanwhile, the German stock index DAX Index traded 0.93 percent lower at 11,851.75 by 08:40 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -35.11 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex