German bunds gain after Eurozone July industrial production disappoints market sentiments; ECB in focus

The German bunds gained during afternoon session Wednesday after eurozone’s industrial production for the month of July disappointed market participants, missing expectations. All eyes will now remain focussed on the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on September 13 by 11:45GMT for detailed direction in the debt market.

The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to 0.415 percent, the yield on 30-year note fell nearly 1-1/2 basis points to 1.094 percent and the yield on short-term 2-year traded 1 basis point lower at -0.550 percent by 10:00GMT.

Eurozone’s industrial output slid 0.8 percent m/m during the month of July, the same pace of decline as seen in June, compared to economists’ forecast of a moderate drop of 0.5 percent. All components of industry except energy and capital goods contracted from a month ago, while energy and capital goods output climbed 0.7 percent and 0.8 percent, respectively.

Intermediate goods output dropped 0.8 percent, durable consumer goods production declined 1.9 percent and non-durable consumer goods by 1.3 percent. On a y/y basis, industrial production fell 0.1 percent, in contrast to a 2.3 percent rise in June and the expected growth of 1 percent.

Meanwhile, the German DAX rose 0.32 percent to 12,008.43 by 10:10GMT, while at 10:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 41.14 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex