German bunds jump after trade balance narrows in June amid muted session

The German bunds jumped during European trading session Friday after the country’s trade balance for the month of June narrowed down amid an otherwise muted day that witnessed data of little economic significance.

The German 10-year bond yields, which move inversely to its price, slumped 2-1/2 basis points to -0.584 percent, the yield on 30-year note plunged 3 basis points to -0.067 percent and the yield on short-term 2-year traded 1-1/2 basis points down at -0.865 percent by 10:45GMT.

This morning’s German goods trade report for June highlighted the increasing toll being taken by global events, with the value of exports down 8.0 percent y/y, the most in three years. On a seasonally adjusted basis, exports slipped 0.1 percent m/m, to leave them down in Q2 by 1.9 percent q/q, the most since the euro crisis in 2012, Daiwa Capital Markets reported.

Imports dropped too, falling for a third consecutive month and by a hefty 2.7 percent m/m, to be down 2.2 percent q/q. While the goods trade surplus declined almost €4bn in June to €16.8bn, and the services balance deteriorated too, an improved income account saw the current account surplus rise more than €4bn to €20.6bn, a touch above the average of the past twelve months albeit down more than €4bn on its level a year earlier.

Looking ahead, there seems every reason to expect the dire export trend to continue, with export orders maintaining a downtrend and surveys suggesting a further deterioration in external demand at the start of Q3, the report added.

Meanwhile, the German DAX slipped -1.00 percent to 11,731.92 by 10:55GMT.