German bonds lose strength after composite, services PMI hit 2-month high in August

The German government bonds lost strength Tuesday after the country’s composite as well as services Purchasing Managers’ Index (PMI) for the month of August reached its highest in two months, signalling solid expansion in business activities.

The German 10-year bond yields, which moves inversely to its price, rose nearly 1 basis point to 0.37 percent, the yield on the 30-year note climbed 1-1/2 basis points to 1.17 percent and the yield on short-term 2-year traded flat at -0.73 percent by 09:15GMT.

The seasonally adjusted final IHS Markit Germany Services PMI Business Activity Index remained above the no-change mark of 50.0 in August, signalling ongoing growth of output at German service providers. The headline figure posted 53.5, up from July’s ten-month low of 53.1, signalling solid growth. It was the first month-on-month increase in the index since March and took it slightly above its long-run trend level of 53.2.

Further, the seasonally adjusted final IHS Markit Germany Composite Output Index remained above the no-change mark of 50.0 in August, signalling ongoing growth of output at German private sector firms. The headline figure posted 55.8, up from July’s ten-month low of 54.7, signalling strong growth. Manufacturing output rose at the third-fastest rate since January 2014.

Meanwhile, the German DAX traded 0.88 percent higher at 12,208.50 by 09:20 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bearish at -81.56 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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