German bunds flat after returning from year-end holidays; December manufacturing PMI rises

The German bunds remained flat during early European session Wednesday after returning from a long year-end holiday, following Christmas and New Year, while the country’s manufacturing PMI for the month of December, edged tad higher than market expectations as well as the previous reading.

The German 10-year bond yield, which move inversely to its price, hovered around -0.187 percent, the yield on 30-year note remained flat at 0.347 percent while the yield on short-term 2-year too remained steady at -0.599 percent by 11:05GMT.

The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases – registered 43.7 in December, down slightly from November's five-month high of 44.1. The latest reading was below the average since the current period of contraction began last January.

"Germany's manufacturing sector closed out 2019 with another weak performance and remains a thorn in the side of the economy. Falling goods production across the fourth quarter of the year bodes ill for final growth figures, while sustained cuts to workforce numbers at factories continue to pose a threat to Germany's so-far solid consumer spending," said Phil Smith, Principal Economist at IHS Markit.

Meanwhile, the German DAX edged tad 0.75 percent higher to 13,347.72 by 11:15GMT.