The German bunds jumped Tuesday as investors wait to watch the country’s 10-year auction, scheduled to be held on February 7 by 10:40GMT and the trade balance for the month of December, due on the following day at 07:00GMT.
The German 10-year bond yields, which move inversely to its price, slumped nearly 4 basis points to 0.70 percent, the yield on 30-year note plunged nearly 4 basis points to 1.35 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points lower at -0.57 percent by 08:15GMT.
With this week’s euro area dataflow dominated by December figures from the industrial sector, this morning brought the first release in this vein in the shape of the latest German factory orders numbers. And, tallying with recent survey measures such as the Ifo indices and PMIs, these suggested that Germany’s manufacturing sector is on fire, with orders leaping 3.8 percent m/m in December following a drop of just 0.1 percent m/m (smaller than previously thought) in November, to leave them up a whopping 4.1 percent q/q in Q4, the strongest quarterly rate in a year.
To some extent, the vigor reflected bulk orders – excluding these items Destatis estimates that orders rose a less sparkling 0.8 percent m/m, which nevertheless followed robust growth on that basis of 1.8 percent m/m in November. Looking at the breakdown by destination, foreign orders led the way, rising 5.9 percent m/m (and 5.9 percent q/q in Q4) thanks to a surge in demand for capital goods, with new orders from the euro area up 11.2 percent m/m. But domestic orders maintained their uptrend increasing by 0.7 percent m/m (1.7 percent q/q in Q4).
Meanwhile, the German DAX slumped 2.31 percent to 13,394.00 by 08:30 GMT, while at 08:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 29.08 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex
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