German bonds continue range-bound trading after manufacturing PMI rebounds in August

The German government bonds remained range-bound Friday even as the country’s manufacturing Purchasing Managers’ Index (PMI) rebounded during the month of August as output, new orders and new export business all rose more sharply than in July, with the latter expanding at the fastest rate since May 2010.

The German 10-year bond yields, which moves inversely to its price, hovered around 0.36 percent, the yield on 30-year note traded flat at 1.12 percent and the yield on short-term 2-year also remained steady at -0.73 percent by 09:20GMT.

The headline IHS Markit/BME Germany Manufacturing PMI rose to 59.3 in August, from July’s five-month low of 58.1. This was the third-highest level since April 2011 and signaled a marked overall improvement in manufacturing business conditions in the manufacturing sector of the eurozone’s largest economy.

The upward movement in the PMI reflected faster increases in output and new orders as well as a greater lengthening in suppliers’ delivery times. The current 33-month period of overall growth is the second-longest in the 21-year survey history.

"The final manufacturing data for August support IHS Markit’s view that economic growth in Germany will be stronger than previously expected in 2017. IHS Markit now expects calendar-adjusted GDP growth to reach 2.3 percent in 2017 and 2.1 percent in 2018," said Trevor Balchin, Director, Economics at IHS Markit.

Meanwhile, the German DAX traded 0.50 percent higher at 12,118.50 by 08:50 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -8.88 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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