German bunds suffer despite fall in November industrial production; 10-year auction in focus

The German bunds suffered during European session Tuesday despite the fall in the country’s industrial production for the month of November, released earlier today. Investors will now keep an eye over the country’s 10-year auction, scheduled to be held on January 9 by 10:40GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, jumped 3 basis points to 0.241 percent, the yield on 30-year note surged nearly 2 basis points to 0.884 percent while the yield on short-term 2-year traded 1 basis point up at -0.574 percent by 09:15GMT.

Recent data from Germany’s manufacturing sector have been weak, with November’s factory orders figures reported yesterday showing falls of 1.0 per and 4.3%Y/Y, the sharpest annual decline since 2012, and the December PMI for the sector declining to 51.5, the lowest in two and a half years, Daiwa Capital Markets reported.

And consistent with those downbeat readings, this morning’s German industrial production figures for November were also very disappointing, revealing a drop in output of 1.9 percent m/m, the third successive decline and the steepest since August 2014. All major output components fell, with production of consumer goods and energy production retreating the most, by 4.1 percent m/m and 3.1 percent m/m respectively.

Meanwhile, the German DAX rose 0.55 percent to 10,805.49 by 09:20GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -20.41 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex